Amgen’s 11.6% return over the past six months has outpaced the S&P 500 by 7.3%, and its stock price has climbed to $307.50 per share. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.

Is now still a good time to buy AMGN? Or are investors being too optimistic? Find out in our full research report, it’s free.

Why Does AMGN Stock Spark Debate?

Founded in 1980 during the early days of the biotechnology revolution, Amgen (NASDAQ: AMGN) is a biotechnology company that discovers, develops, and manufactures innovative medicines to treat serious illnesses like cancer, osteoporosis, and autoimmune diseases.

Two Positive Attributes:

1. Encouraging Short-Term Revenue Growth

We at StockStory place the most emphasis on long-term growth, but within healthcare, a stretched historical view may miss recent innovations or disruptive industry trends. Amgen’s annualized revenue growth of 14.1% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

2. Excellent Free Cash Flow Margin Boosts Reinvestment Potential

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Amgen has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the healthcare sector, averaging an eye-popping 31% over the last five years.

One Reason to be Careful:

New Investments Fail to Bear Fruit as ROIC Declines

ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Amgen’s ROIC has unfortunately decreased significantly. Only time will tell if its new bets can bear fruit and potentially reverse the trend.

Final Judgment

Amgen has huge potential even though it has some open questions, and with its shares beating the market recently, the stock trades at 14.8× forward P/E (or $307.50 per share). Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

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