Amgen Completes $60 Billion Share Buyback, Analysts Weigh in on Future Growth Prospects

Amgen has completed a $60.59 bln share buyback program after 14 years. Despite a 4.6% stock price increase, analysts are cautious due to biosimilar competition, patent expirations, and legal issues. Ongoing product trials and R&D efforts may provide growth potential, but future risks remain a concern. The company's underperformance compared to the US market and biotech industry underscores competitive and regulatory challenges.

Amgen has completed a significant share buyback program totaling $60.59 billion, marking the end of a 14-year initiative. Despite this substantial capital return, analysts remain cautious due to persistent challenges in the company's core business, including biosimilar competition, patent expirations, and legal issues. While ongoing product trials and R&D efforts hold promise for future growth, the risks associated with these challenges cannot be ignored.

Amgen's Q2 2025 earnings report highlighted a 9% revenue increase to $9.2 billion, driven by newer therapies like Repatha, EVENITY, and TEZSPIRE. However, these gains were offset by the collapse of legacy products such as Enbrel and XGEVA, which saw significant declines due to biosimilar competition and patent expirations [1]. The company's guidance for 2025 revenue of $35–36 billion and an EPS of $20.20–$21.30 may tempt investors to overlook critical structural headwinds [1].

Biosimilars pose a significant threat to Amgen's revenue and margins. The company's biosimilar portfolio, while offering some offset to losses, is itself subject to margin compression. With 15 of its top 20 drugs facing biosimilar threats by 2027, Amgen's ability to sustain its current margin profile is questionable [1]. Moreover, the obesity market, which Amgen is attempting to enter with MariTide, is already crowded and dominated by established players like Novo Nordisk and Eli Lilly [2].

Despite a 4.6% stock price increase, Amgen's underperformance relative to the US market and biotech industry underscores competitive and regulatory challenges. The company's free cash flow of $1.9 billion in Q2 2025 and a 6% dividend increase may seem attractive, but they mask deeper issues, such as the reliance on cost-cutting and debt reduction rather than organic efficiency [1].

Amgen's valuation, with a forward P/E of 13.26, exceeds industry peers but reflects market skepticism about its long-term growth prospects. The company's 2025 guidance assumes a $35–36 billion revenue target, but this excludes potential pricing pressures from the Inflation Reduction Act and U.S. political shifts [1].

In conclusion, while Amgen's share buyback program and recent earnings indicate a level of financial resilience, the company faces substantial risks and challenges. For investors, patience is key. A "buy" rating in 2025 would require clearer evidence that Amgen can offset its core drug erosion with sustainable obesity market gains and maintain its margin resilience. Until then, the fundamentals suggest a cautious approach.

References:
[1] https://www.ainvest.com/news/amgen-strong-earnings-guidance-fail-justify-buy-rating-2025-2508/
[2] https://www.ainvest.com/news/amgen-q2-earnings-critical-inflection-point-biotech-leading-innovator-2508/