Insights Into Amgen's Performance Versus Peers In Biotechnology Sector

In the fast-paced and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Amgen AMGN in comparison to its major competitors within the Biotechnology industry. By analyzing crucial financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in the industry.

Amgen Background

Amgen is a leader in biotechnology-based human therapeutics. Flagship drugs include red blood cell boosters Epogen and Aranesp, immune system boosters Neupogen and Neulasta, and Enbrel and Otezla for inflammatory diseases. Amgen introduced its first cancer therapeutic, Vectibix, in 2006 and markets bone-strengthening drug Prolia/Xgeva (approved 2010) and Evenity (2019). The acquisition of Onyx bolstered the firm's therapeutic oncology portfolio with Kyprolis. Recent launches include Repatha (cholesterol-lowering), Aimovig (migraine), Lumakras (lung cancer), and Tezspire (asthma). The 2023 Horizon acquisition brings several rare disease drugs, including thyroid eye disease drug Tepezza. Amgen also has a growing biosimilar portfolio.

By conducting an in-depth analysis of Amgen, we can identify the following trends:

• A Price to Earnings ratio of 19.14 significantly below the industry average by 0.35x suggests undervaluation. This can make the stock appealing for those seeking growth.

• The elevated Price to Book ratio of 18.81 relative to the industry average by 3.86x suggests company might be overvalued based on its book value.

• With a relatively low Price to Sales ratio of 5.4, which is 1.0x the industry average, the stock might be considered undervalued based on sales performance.

• The Return on Equity (ROE) of 23.97% is 19.24% above the industry average, highlighting efficient use of equity to generate profits.

• Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.6 Billion, which is 2.98x above the industry average, indicating stronger profitability and robust cash flow generation.

• The gross profit of $5.1 Billion is 2.21x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 3.77% is notably higher compared to the industry average of 2.91%, showcasing exceptional sales performance and strong demand for its products or services.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

By evaluating Amgen against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:

• Amgen has a higher debt-to-equity ratio of 7.9 compared to its top 4 peers.

• This indicates a higher level of financial risk as the company relies more heavily on borrowed funds. Investors may perceive this as a potential concern.

Key Takeaways

Amgen's low PE ratio suggests that it is undervalued compared to its peers in the Biotechnology industry. The high PB ratio indicates that the market values Amgen's assets at a higher price relative to its book value. The low PS ratio suggests that Amgen's sales are relatively low compared to its market capitalization. On the other hand, Amgen's high ROE, EBITDA, gross profit, and revenue growth indicate strong financial performance compared to its industry peers.

This article was generated by Benzinga's automated content engine and reviewed by an editor.