Amgen's Margin Erosion May Cancel Out Cheap Forward Multiple

The forward multiple of Amgen looks cheap at first glance, but its assumed margins are a key factor to consider. According to Trefis' analysis, Amgen's forward multiple appears undervalued compared to its peers in the pharmaceutical industry.

However, upon closer inspection, it becomes clear that these low multiples are largely due to the company's conservative margin assumptions. In fact, analysts expect Amgen's margins to decline significantly over the next few years, from 33% in 2023 to around 24% by 2026.

This decline in margins is a key factor to consider when evaluating Amgen's forward multiple. While the company may appear cheap on paper, its assumed margin erosion could negate any potential upside. It remains to be seen whether these projections will materialize and impact Amgen's stock performance.