I have jokingly referred to Amgen, Inc. (NASDAQ:AMGN) in the past as a “senior citizen” of biotech. The company was founded 33 years ago, making Amgen, Inc. (NASDAQ:AMGN) a virtual Methuselah when it comes to biotech companies. Regardless of age, every stock needs a checkup every now and then. Let’s see how Amgen stock holds up in this month’s checkup.
Shares of Amgen, Inc. (NASDAQ:AMGN) are up more than 15% so far this year. That’s not too shabby, but how does the stock compare to the rest of the companies in the S&P 500 index?
The first half of 2013 shows Amgen, Inc. (NASDAQ:AMGN) stock easily outpacing the S&P 500. Of course, different sectors do better in different market conditions. Perhaps comparing Amgen to other biotech stocks might show a better view of its performance. Let’s use the iShares Nasdaq Biotechnology ETF as a proxy for the rest of the biotech universe.
Unfortunately, Amgen doesn’t look as hot when stacked up against only other biotech stocks. The poorer showing stems in large part from incredible runs by the two companies that make up a higher percentage of the ETF’s holdings than Amgen does. Both Regeneron Pharmaceuticals Inc (NASDAQ:REGN) and Gilead Sciences, Inc. (NASDAQ:GILD) are up more than 50% so far this year.
What about valuation? Amgen, Inc. (NASDAQ:AMGN)’s trailing price-to-earnings multiple currently stands at nearly 18. That doesn’t seem too high for a biotech stock. Looking at the company’s P/E history sheds a little more light, though.
If we look back over the past 10 years, Amgen stock looks downright cheap based on trailing P/E. However, its trailing P/E is actually now at the highest level since 2008.
Compared to other biotechs, Amgen’s valuation based on trailing P/E looks attractive. Regeneron Pharmaceuticals Inc (NASDAQ:REGN) sports a trailing P/E ratio of 35, while Gilead Sciences, Inc. (NASDAQ:GILD)’s multiple stands at 31. Biogen Idec Inc. (NASDAQ:BIIB) and Celgene Corporation (NASDAQ:CELG) are even pricier, with trailing P/E values near 37.
Amgen stock seems dirt cheap by comparison with these other biotechs on a forward P/E basis. Its forward multiple of below 13 is well below Celgene Corporation (NASDAQ:CELG)’s 18 and Gilead Sciences, Inc. (NASDAQ:GILD)’s 19. Biogen Idec Inc. (NASDAQ:BIIB) is even higher at 23, with Regeneron Pharmaceuticals Inc (NASDAQ:REGN) blowing the curve with a 43 forward P/E.