Amgen – Strong Pipeline Makes It A Buy. Amgen (AMGN) had a solid quarter beating estimates, but the company guided lower for GAAP earnings per share in 2021. As expected, the stock price dropped in response. The main problem for Amgen is higher costs leading to lower margins and greater competition. But Amgen arguably has a wide moat with several blockbuster biologic drugs. Furthermore, Amgen’s pipeline is solid for oncology, inflammation, and other categories. The company is returning cash to shareholders and Amgen is a Dividend Contender. The drop in stock price simultaneously allowed the yield to go over 3%. Historically, that has been a good time to buy Amgen. The dividend is well covered by earnings and free cash flow too. I view Amgen as a long-term buy.
Overview of Amgen – Strong Pipeline Makes It A Buy
Amgen was founded in 1980. The company’s early history was focused on anemia and renal disease. Today, Amgen is one of the largest R&D based pharma companies in the U.S. and the world. The company has franchises in oncology, hematology, inflammation, cardiovascular diseases, nephrology, and bone. Amgen has several blockbuster drugs including Prolia (osteoporosis), Otezla (inflammation), Enebrel (rheumatoid arthritis), Neulasta (oncology/bone), XGEVA (bone), KYPROLIS (cancer), and MVASI (cancer, biosimilar for Avastin). The company has over 20 drugs that it sells as seen in the chart below. Amgen acquired Otezla from Celgene, Five Prime Therapeutics, Rodeo Therapeutics, and Teneobio over the past few years to enhance its product portfolio and pipeline. Total revenue was $25,424 million in 2020 and $24,144 million in LTM.
Amgen’s Revenue and Earnings Growth
Amgen has grown through both acquisitions and organic R&D to drive both the top and bottom lines. This approach is common in large pharma companies as they need to replenish their pipeline as drugs lose exclusivity and competition increases.
In M&A, Amgen acquired the drug Otezla in 2019 from Celgene when the latter was acquired by Bristol-Myers Squibb (BMY)…
Disclosure: Long AMGN
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