Investment advice
We reckon that $168 per share is a good buy point.
Introduction
Amgen(AMGN)operate in six commercial areas: inflammation, oncology/hematology, bone health, cardiovascular (CV) disease, nephrology and neuroscience.
Amgen(AMGN) conduct discovery research primarily in three therapeutic areas: inflammation, oncology/hematology and general medicine.
Profitability analysis
Amgen(AMGN) reported total revenues $26.2 billion, $25.9 billion and $25.4 billion in 2022,in 2021 and in 2020.
Amgen(AMGN)’total revenues increased slowly over two years, which fall into growth bottleneck.
The net income was $6.5 billion, $5.8 billion and $7.2 billion in 2022,in 2021 and in 2020.
The net profit margin was 24.8%,22.4% and 28.3% in 2022,in 2021 and in 2020.
The total stockholder’s equity amounted to $3.67 billion and $6.7 billion in 2022 and in 2021.
We may not calculate the Return On Equity ,because a large amount of money consumed by repurchasing stock and paying dividends diminished the stockholder’s equity.
Asset structure analysis
The total assets totaled $65.1 billion in fiscal 2022,compared with $61.1 billion in fiscal 2021.
As of December 31,2022 the intangible asset ,net was $16 billion and the goodwill was $15.5 billion.
The both of intangible asset and goodwill was about $31.5 billion ,which have 48.3% of total assets. This is a extremely larger number .
Acquiring other company is a expand way for many pharmaceuticals firm.
Liquidity and solvency analysis
Amgen(AMGN) reached a high debt level . Amgen(AMGN) had stockholder’s equity of $3.66 billion.
So easy, the total debt was about $61.4 billion,and then the debt ratio was 94.3%.
Next, the company will have large-scale acquisition.
The interest expenses, net was $1.4 billion for fiscal 2022,and the interest rate of all debt was roughly 3-4%.
Net cash flows provided by operating activities was 9.7 billion in fiscal 2022.Only has it have large cash flows and it would be able to borrow new debt to repay old debt.
Cash flow analysis
The free cash flow in 2022 was $8.78 billion.
The repurchases of common stock was $6.3 billion in 2022.
The dividends paid was about $4.2 billion in 2022.
The amount of repurchase stock and dividends paid was more than the free cash flow in 2022.
The proceeds from issuance of debt was $6.9 billion in 2022。
The above numbers show that the free cash flow was used up by repurchasing stock and dividends payment. Amgen(AMGN) borrowed $6.9 billion to fill in gaps.
Acquiring company always give rise to increasing debt, which is good or not good.
Amgen(AMGN)’s Q3, 2023
Amgen(AMGN) reported $19.99 billion in revenues in the nine months ended September 30,2023 and $19.4 billion in revenues in the nine months end September 30,2022.
Amgen(AMGN) generated $5.95 billion in net income in the nine months ended September 30,2023 and $4.9 billion in net income in the nine months ended September 30,2022.
Net cash flow provided by operating activities was $7.9 billion in the nine months ended September 30,2023.
Long-term debt was up $21.7 billion to $59 billion as of September 30,2023,compared with $37.3 billion as of September 30,2022.
The increase in long-term debt will be used to acquire Horizon Therapeutics plc.
Let’s to see the information (from Amgen(AMGN)’s 10k form,2022)
Proposed acquisition of Horizon Therapeutics plc
•On December 12, 2022, we announced that we entered into a transaction agreement under which Amgen will acquire all shares of Horizon for $116.50 per share in cash for a transaction equity value of approximately $27.8 billion. In connection with the proposed acquisition of Horizon, in December 2022 we entered into a bridge credit agreement and a term loan credit agreement with an aggregate principal amount of $28.5 billion. Horizon is a global biotechnology company headquartered in Dublin, Ireland and is focused on the discovery, development and commercialization of medicines that address critical needs for people impacted by rare, autoimmune and severe inflammatory diseases. Horizon has 12 marketed medicines and a pipeline with more than 20 development programs. The closing of this transaction is contingent upon satisfaction of certain regulatory (including FTC review) and other customary closing conditions.
On January 30, 2023, the Company and Horizon each received a request for additional information and documentary materials (Second Request) from the FTC in connection with the FTC’s review of the Company’s proposed acquisition of Horizon. The effect of the Second Request is to extend the waiting period imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, until 30 days after the Company and Horizon have substantially complied with the Second Request, unless that period is extended voluntarily by the Company and Horizon or terminated sooner by the FTC.
