Amgen Stock Could Be 40% Undervalued On Phase 3 Sjögren's Data
Amgen's stock price has raised concerns about whether it is supported by the company's cash generation. The biotech giant has delivered a strong run over the past several years, but its current share price of $406.09 may be at risk if future cash flows do not materialize as expected.
A recent analysis using the Discounted Cash Flow (DCF) model suggests that Amgen's stock could be 40% undervalued based on Phase 3 data for dazodalibep in systemic Sjögren's disease. The model assumes continued growth in free cash flow, which would push the company's intrinsic value above its current market price.
Amgen's ability to keep turning its drug portfolio into sizeable free cash generation is a key factor in this analysis. Over the last twelve months, the business produced about $10.8 billion of free cash flow, and projections assume that those cash flows continue growing rather than shrinking. This growth profile, combined with the current share price, creates a gap between the DCF estimate and where the market is trading today.
One narrative suggests that Amgen's positive Phase 3 data could support longer-term cash flow resilience if it converts into an approved product. However, another narrative warns of caution in the current pricing, citing concerns about obesity hype and legacy erosion.