Biogen Inc. (BIIB) has been popular amongst investors lately. The stock has gained 20.5% in price year-to-date and 23.2% over the past year to close the last trading session at $289.10. Wall Street analysts expect the stock to hit $313.87 in the near term, indicating a potential upside of 8.6%.
BIIB surpassed the EPS and revenue estimates in the last reported quarter. Its EPS beat the consensus estimate by 15.5%, and its revenue came 1.7% higher than analyst estimates.
On November 29, 2022, BIIB announced the phase 3 trial results of lecanemab, which it has developed with Japanese drugmaker Eisai. Results from the clinical trial showed that lecanemab removed clumps of a protein called beta-amyloid from the brains of people with Alzheimer’s. The trials were well received as they demonstrated that the drug could slow cognitive decline in Alzheimer’s patients.
The post-results excitement was palpable among optimists as the trial showed that the drug reduces the levels of amyloid beta and could also slow the progression of Alzheimer’s. In addition, the trials also suggest lecanemab may also lower tau levels.
Many are optimistic about lecanemab’s success, especially after Aduhelm’s failure. This could be a game changer for BIIB, resulting in billions of dollars of additional revenue. However, lecanemab is yet to receive FDA approval. Moreover, the drug shows promise only for early-stage Alzheimer’s disease.
Here’s what could influence BIIB’s performance in the upcoming months:
BIIB’s net income attributable to BIIB 244.7% year-over-year to $1.13 billion for the third quarter ended September 30, 2022. The company’s EPS came in at $7.84, representing an increase of 253.2% year-over-year. Its total current assets increased 24.3% to $9.76 billion, compared to $7.85 billion for the fiscal year ended December 31, 2021.
In terms of forward non-GAAP P/E, BIIB’s 16.90x is 13.8% lower than the 19.61x industry average. Its forward P/S of 4.14x is 5.7% lower than the 4.38x industry average. Also, the stock’s 11.09x trailing-12-month EV/EBITDA is 17.6% lower than the 13.45x industry average.
In terms of trailing-12-month EBIT margin, BIIB’s 28.54% compares to the industry average of negative 1.05%. Likewise, its 33.68% trailing-12-month EBITDA margin is 804% higher than the industry average of 3.73%. Furthermore, the stock’s 0.43% trailing-12-month asset turnover ratio is 24.3% higher than the industry average of 0.34%.
POWR Ratings Show Promise
BIIB has an overall rating of A, which equates to a Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. BIIB has an A grade for Value, in sync with its discounted valuation.
It has an A grade for Quality, consistent with its high profitability.
BIIB’s stock is trading above its 50-day and 200-day moving averages of $281.60 and $225.95, respectively, indicating an uptrend. The company’s new drug, lecanemab, both reduced the brain’s disease and slowed memory decline during clinical trials. If the drug receives FDA approval by next year, it could be a game-changer for BIIB.
Given the company’s robust financials, high profitability, and discounted valuation, it could be wise to buy the stock now.
How Does Biogen Inc. (BIIB) Stack up Against Its Peers?
BIIB has an overall POWR Rating of A, equating to a Strong Buy rating. Check out these other stocks within the Biotech industry with an A (Strong Buy) rating: Vertex Pharmaceuticals Incorporated (VRTX), United Therapeutics Corporation (UTHR), and Gilead Sciences, Inc. (GILD).
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BIIB shares were unchanged in premarket trading Friday. Year-to-date, BIIB has gained 20.50%, versus a -15.84% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
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