Amgen (AMGN)

Biotech company Amgen (NASDAQ:AMGN) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 12.4% year on year to $9.56 billion. The company’s full-year revenue guidance of $36.2 billion at the midpoint came in 1.5% above analysts’ estimates. Its non-GAAP profit of $5.64 per share was 12.5% above analysts’ consensus estimates.

Company Overview

Founded in 1980 during the early days of the biotechnology revolution, Amgen (NASDAQ:AMGN) is a biotechnology company that discovers, develops, and manufactures innovative medicines to treat serious illnesses like cancer, osteoporosis, and autoimmune diseases.

Over the next few years, therapeutic companies, which develop a wide variety of treatments for diseases and disorders, face strong tailwinds from advancements in precision medicine (including the use of AI to improve hit rates) and growing demand for treatments targeting rare diseases. However, headwinds such as rising scrutiny over drug pricing, regulatory unknowns, and competition from larger, more resourced pharmaceutical companies could weigh on growth.

Amgen's competitors vary by therapeutic area and include major pharmaceutical companies such as AbbVie, Novartis, and Pfizer in the inflammation space; Regeneron and Sanofi for cholesterol medications; and Bristol Myers Squibb, Janssen, and Takeda in oncology. For its rare disease portfolio, competitors include Alexion (part of AstraZeneca) and Sanofi Genzyme.

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With $35.97 billion in revenue over the past 12 months, Amgen sports economies of scale. This is important as it gives the company more leverage in a heavily regulated, competitive environment that is complex and resource-intensive.

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, Amgen’s 7.6% annualized revenue growth over the last five years was decent. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Amgen’s annualized revenue growth of 15.8% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

We can dig further into the company’s revenue dynamics by analyzing its most important segment, Product & Pipeline. Over the last two years, Amgen’s Product & Pipeline revenue averaged 16.1% year-on-year growth.

This quarter, Amgen reported year-on-year revenue growth of 12.4%, and its $9.56 billion of revenue exceeded Wall Street’s estimates by 6.7%.

Looking ahead, sell-side analysts expect revenue to grow 1.1% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and indicates its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.

Amgen has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average operating margin of 27.6%.

Looking at the trend in its profitability, Amgen’s operating margin decreased by 4.4 percentage points over the last five years. This performance was caused by more recent speed bumps as the company’s margin fell by 8.9 percentage points on a two-year basis. We’re disappointed in these results because it shows its expenses were rising and it couldn’t pass those costs onto its customers.

This quarter, Amgen generated an operating margin profit margin of 26.4%, up 2.4 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Amgen’s decent 5.9% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

In Q3, Amgen reported adjusted EPS of $5.64, up from $5.58 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Amgen’s full-year EPS of $21.87 to shrink by 3.9%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Amgen has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the healthcare sector, averaging 29.9% over the last five years.

Taking a step back, we can see that Amgen’s margin expanded by 1.7 percentage points during that time. This shows the company is heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability fell.

Amgen’s free cash flow clocked in at $4.25 billion in Q3, equivalent to a 44.4% margin. This result was good as its margin was 5.5 percentage points higher than in the same quarter last year, building on its favorable historical trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Amgen’s five-year average ROIC was 17.6%, beating other healthcare companies by a wide margin. This illustrates its management team’s ability to invest in attractive growth opportunities and produce tangible results for shareholders.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Amgen’s ROIC has decreased significantly over the last few years. Only time will tell if its new bets can bear fruit and potentially reverse the trend.

Amgen reported $9.45 billion of cash and $54.59 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $19.94 billion of EBITDA over the last 12 months, we view Amgen’s 2.3× net-debt-to-EBITDA ratio as safe. We also see its $2.85 billion of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Amgen blew past analysts’ revenue and EPS expectations this quarter. We were also glad it raised its full-year revenue and EPS guidance, exceeding Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock remained flat at $299.97 immediately after reporting.

Updated: December 3, 2025 at 11:04 PM EST

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

Amgen possesses a number of positive attributes. First off, its revenue growth was decent over the last five years. And while its diminishing returns show management's recent bets still have yet to bear fruit, its impressive operating margins show it has a highly efficient business model. On top of that, its powerful free cash flow generation enables it to stay ahead of the competition through consistent reinvestment of profits.

Amgen’s P/E ratio based on the next 12 months is 16.1x. Looking at the healthcare space right now, Amgen trades at a compelling valuation. If you’re a fan of the business and management team, now is a good time to scoop up some shares.

Wall Street analysts have a consensus one-year price target of $322.88 on the company (compared to the current share price of $345.92).