Biogen’s Struggles: A Mixed Bag of Opportunities and Challenges
Biogen Inc. (BIIB), headquartered in Cambridge, Massachusetts, specializes in therapies for neurological and neurodegenerative diseases. The company’s market cap stands at $23 billion, with treatments addressing conditions like multiple sclerosis, non-Hodgkin’s lymphoma, rheumatoid arthritis, Crohn’s disease, and psoriasis.
Significant Underperformance in the Market
Over the last year, Biogen’s shares have notably lagged behind the broader market. The stock has dropped 31.7%, while the S&P 500 Index ($SPX) has increased by nearly 31%. In 2024 alone, BIIB has plummeted 39%, contrasting with the SPX’s rise of 25.2% year-to-date.
Comparison with Competing ETFs
The disparity in performance is more visible when comparing BIIB with the iShares Neuroscience and Healthcare ETF (IBRN), which has appreciated by approximately 26.6% over the past year. The ETF’s modest 1% gain this year starkly contrasts with BIIB’s double-digit losses in the same period.
Challenges in Alzheimer’s Drug Development
Although Biogen has made some progress with drugs aimed at amyloid plaques—like Aduhelm and Donanemab—its performance remains disappointing, as significant cognitive improvements for Alzheimer’s patients are still out of reach. Despite acquiring smaller biotech firms with promising strategies, the results have not met expectations. Consequently, this opens the door for new players to potentially deliver more effective Alzheimer’s therapies.
Q3 Earnings Report
On October 30, following the release of its Q3 results, BIIB shares fell over 1%. The company reported an adjusted EPS decline of 6.4% year-over-year to $4.08, with revenue at $2.5 billion, a 2.5% dip from last year. For the full year, Biogen anticipates adjusted EPS between $16.10 and $16.60.
Analysts’ Expectations
For the current fiscal year, ending in December, analysts project BIIB’s EPS to rise by 11.7% to $16.44 on a diluted basis. The company’s earnings surprise history is a mixed bag; it has exceeded consensus estimates in three of the last four quarters while falling short on one occasion.
Analyst Ratings Overview
The consensus rating among 32 analysts covering Biogen stock is a “Moderate Buy,” with 18 “Strong Buy” ratings, one “Moderate Buy,” and 13 “Holds.” This outlook is less optimistic compared to a month ago, when 19 analysts recommended a “Strong Buy” and two favored a “Moderate Buy.”
Price Target Adjustments
On November 21, Mizuho maintained an “Outperform” rating for BIIB but reduced its price target to $207, suggesting a potential upside of 31.1% from current levels. The average price target is set at $249.76, indicating a 58.2% premium to Biogen’s current price. Notably, the Street-high price target of $342 implies a bold upside potential of 116.6%.
On the date of publication, Neha Panjwani did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. For more details, please view the Barchart Disclosure Policy here. More news from Barchart
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
