A Wall Street Journal report that linked at least 20 deaths and 22 serious liver injuries in Japan to an Amgen (AMGN) rare disease drug has quickly put fresh attention on the stock.

The latest safety headlines arrive after a mixed stretch for the stock, with a 1 day share price return of 0.56%, a 7 day share price return of 2.58%, and a 90 day share price return down 11.72% from recent highs. At the same time, the 1 year total shareholder return of 25.07% and 3 year total shareholder return of 70.25% point to stronger longer term momentum.

If this kind of healthcare risk and reward trade off has your attention, it may be worth broadening your watchlist with 34 healthcare AI stocks

With Amgen trading at US$339.30, sitting close to analyst targets yet flagged with a sizable intrinsic discount, the key question is simple: are you looking at an undervalued healthcare giant or a stock already pricing in future growth?

Most Popular Narrative: 3% Undervalued

Compared with Amgen's last close at $339.30, the most followed narrative pegs fair value at about $349.66, leaving a modest valuation gap that hinges on how investors view future earnings power.

Analysts expect earnings to reach $9.9 billion (and earnings per share of $18.37) by about May 2029, up from $7.8 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $12.6 billion in earnings, and the most bearish expecting $7.8 billion.

Want to see what is sitting behind that spread in earnings outcomes? The narrative leans on steady revenue growth, higher margins and a richer future earnings multiple, all carefully layered together.

Result: Fair Value of $349.66 (UNDERVALUED)

However, there is still clear downside risk if drug pricing pressure intensifies or biosimilar competitors take more share in key franchises like Prolia.

Another Angle on Valuation

The community narrative leans on earnings forecasts and a future P/E of about 24x, but the current P/E of 23.5x tells a more mixed story. Amgen trades above the US Biotechs industry at 16.2x, yet below peer averages at 41.1x and its fair ratio of 25.3x, which points to both valuation risk and possible opportunity. Which side of that trade off matters more to you?

Next Steps

The mix of safety headlines and valuation debate can feel finely balanced, so it helps to move quickly and review the data firsthand with 3 key rewards and 1 important warning sign

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.