Investigating Amgen's Standing In Biotechnology Industry Compared To Competitors

Amidst today's fast-paced and highly competitive business environment, it is crucial for investors and industry enthusiasts to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Amgen AMGN in comparison to its major competitors within the Biotechnology industry. By analyzing critical 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.

Through an analysis of Amgen, we can infer the following trends:

• At 21.55, the stock's Price to Earnings ratio is 0.37x less than the industry average, suggesting favorable growth potential.

• It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 21.18 which exceeds the industry average by 4.01x.

• The stock's relatively high Price to Sales ratio of 6.08, surpassing the industry average by 1.05x, may indicate an aspect of overvaluation in terms of sales performance.

• With a Return on Equity (ROE) of 23.97% that is 19.24% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.

• 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.

• With higher gross profit of $5.1 Billion, which indicates 2.21x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 3.77% exceeds the industry average of 2.91%, indicating strong sales performance and market outperformance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.

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.

In terms of the Debt-to-Equity ratio, Amgen stands in comparison with its top 4 peers, leading to the following comparisons:

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

• This implies a greater reliance on debt financing, which can expose the company to higher financial risk and potential challenges.

Key Takeaways

Amgen's low PE ratio suggests that it is undervalued compared to its peers in the Biotechnology industry. The high PB and PS ratios indicate that the company's stock price may be overvalued relative to its book value and sales. On the other hand, Amgen's high ROE, EBITDA, gross profit, and revenue growth suggest that the company is performing well and generating strong returns. Overall, Amgen's valuation analysis suggests a mixed picture, with potential undervaluation in terms of earnings but potential overvaluation in terms of book value and sales.

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