Episode Details

Amgen Inc. (AMGN) Q2 2026 — Reported August 4, 2026 AFTER the US close, for the calendar quarter ended June 30, 2026. Total revenue $10,054M, +10% YoY vs ~$9,426M expected. Non-GAAP diluted EPS $6.29 vs $5.62 expected - an 11.9% beat - but only +4% against $6.02 a year ago. GAAP diluted EPS $4.37, up 65% from $2.65. Free cash flow $3,489M vs $1,911M. FY2026 guidance RAISED for the second time: revenue $38.2-39.4B (from $37.1-38.5B) and non-GAAP EPS $22.30-23.50 (from $21.70-23.10). AMGN closed the regular session at $390.02, up 2.94% into the print, 1% below its record close of $393.10 on July 28. Amgen beat by 11.9% and raised full-year guidance twice - and underneath it, non-GAAP EPS grew just 4%, because consensus had modelled a 7% DECLINE from last year's $6.02. Non-GAAP operating margin FELL half a point to 48.4% on revenue up 10%. The guidance raise was smaller than the beat: Amgen beat by $0.67 and lifted the full-year midpoint by $0.50, so with H1 at $11.44 the guide implies $11.46 in H2 - dead flat on rising revenue. Meanwhile debt outstanding went UP $2.7B in six months, to $57.3B from $54.6B at the year end, and there were ZERO share repurchases in the quarter against $1.4B of dividends. And the denosumab cliff arrived: Prolia -32% and XGEVA -34%, together $1,111M against $1,654M a year ago - $543M gone in one quarter, a $2.2B annual run-rate hole - while Enbrel's net selling price fell 22% under IRA Medicare Part D price setting. THE CALL: HOLD (3/5, A GOOD QUARTER, ALREADY IN THE PRICE) — base-case value ~$356.0 vs ~$390.02 today. KEY METRICS: - CALL: HOLD 3/5. Fair value ~$356 against a $390.02 close - about 9% of downside. This is NOT a call against Amgen; the quarter was good and the portfolio transition is working. It is a call against paying a record price for 4% earnings growth. Method: a ten-year levered free-cash-flow DCF. H1 free cash flow was $4,966M ($6,191M operating cash flow less $1,225M capex); we carry FY2026 at ~$10.5B, growing 5% for five years then 3% for five, 2% terminal, discounted at an 8.5% cost of equity. Because this cash flow is measured AFTER interest, the result is already equity value - no net debt subtracted, or you double count. PV of ten years $85.9B plus discounted terminal value $107.8B = $193.7B over 544M diluted shares = $356. Grid at 7.5/8.5/9.5%: bear $330/$279/$243, base $423/$356/$307, bull $540/$453/$388. A 25/55/20 weighting also gives $356. Note honestly: FOUR of those nine cells sit ABOVE the price. This is a fair-value call, not a bubble call. - REVERSE DCF - WHAT $390.02 REQUIRES: 544M diluted shares x $390.02 = $212.2B of equity. Holding everything else, that needs free cash flow compounding at about 6.5% a year for five years instead of 5% - against the 4% non-GAAP EPS growth Amgen just delivered and the 4.8% its own FY2026 guidance implies (midpoint $22.90 vs $21.85 in 2025). Or, holding our growth, it needs a cost of equity of 7.95% for a company carrying $43.3B of net debt into a denosumab cliff. On enterprise value ($212.2B equity + $43.3B net debt = $255.5B) the stock trades at 24.3x our FY2026E free cash flow, a 4.95% free cash flow yield, 17.0x forward non-GAAP EPS and 23.7x GAAP EPS - the non-GAAP figure adds back roughly $6.08 a share of acquisition amortisation. - THE BEAT IS AGAINST A FALLING BAR: $6.29 vs $5.62 is an 11.9% beat, but Amgen earned $6.02 in the same quarter last year, so consensus had modelled a 7% DECLINE. Real growth was 4%. Revenue grew 10% ($10,054M vs $9,179M) while non-GAAP operating income grew only 7% ($4,612M vs $4,293M) and the non-GAAP operating margin FELL 0.5 points to 48.4%. The non-GAAP tax rate rose from 14.2% to 15.6%. GAAP operating income was $3,514M (36.8% of product sales, +6.5 points) and GAAP net income $2,375M. Product sales were $9,537M, +9%, all of it volume. - THE GUIDANCE RAISE IS SMALLER THAN THE BEAT: FY2026 non-GAAP EPS guidance went $21.60-23.00 (February) to $21.70-23.10 (April) to $22.30-23.50 now - a midpo