Amgen, Inc. (AMGN): Huge Upside on Pipeline Strength

The comparative valuation analysis shows us that Amgen is trading at cheaper valuations as compared to peers. The company value has appreciated approximately 40% in the last one year, but there is still room for further appreciation. If we use a P/E of 15x and street’s EPS estimates of $8.28, we can calculate a target price of $125 for 2014.

Source: Thompson Reuters

Bottom-line

Amgen, Inc. (NASDAQ:AMGN) is the largest biotechnology company in the world and has the richest pipeline in the entire sector. Healthcare sector is going through a major patent crisis and companies like Pfizer Inc. (NYSE:PFE), Teva, and AstraZeneca etc. are suffering from generic threat. Amgen’s strong pipeline gives shareholders protection against the threat of falling sales due to expiring patents. This comparative valuation analysis shows that despite a stellar EPS growth and a strong pipeline, Amgen is still trading at cheap valuations.

A number of exciting catalysts are approaching for Amgen and the company can appreciate on positive news from trial results. Using a P/E of 15x and street’s EPS estimates, we can establish a target price of $125, a 22% upside on current price levels. Therefore, Amgen is a strong buy due to its cheap valuations and a strong pipeline.

Mohsin Saeed has no position in any stocks mentioned. The Motley Fool recommends Gilead Sciences, Inc. (NASDAQ:GILD).

The article Huge Upside on Pipeline Strength originally appeared on Fool.com.

Mohsin is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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