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Cambridge, Massachusetts-based Biogen Inc. (BIIB) discovers, develops, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases. With a market cap of $23 billion, the company’s products address diseases such as multiple sclerosis, non-hodgkin's lymphoma, rheumatoid arthritis, crohn's disease, and psoriasis.
Shares of this leading biotechnology company have significantly underperformed the broader market over the past year. BIIB has declined 31.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 31%. In 2024, BIIB stock is down 39%, compared to the SPX’s 25.2% rise on a YTD basis.
Narrowing the focus, BIIB’s underperformance is apparent compared to the iShares Neuroscience and Healthcare ETF (IBRN). The exchange-traded fund has gained about 26.6% over the past year. Moreover, the ETF’s 1% gain on a YTD basis outshine the stock’s double-digit losses over the same time frame.
Although BIIB has made advancements with drugs targeting amyloid plaques, such as Aduhelm and Donanemab, the company's performance has been lacking as breakthrough treatments for substantial cognitive improvements in Alzheimer's patients are still elusive. While BIIB has acquired smaller biotech companies with innovative approaches, the outcomes of these acquisitions have not met expectations. This leaves room for new players to disrupt the market with more effective and innovative therapies for Alzheimer's disease.
On Oct. 30, BIIB shares closed down more than 1% after reporting its Q3 results. Its adjusted EPS declined 6.4% year over year to $4.08. The company’s revenue stood at $2.5 billion, down 2.5% year over year. BIIB expects full-year adjusted EPS to be between $16.10 and $16.60.
For the current fiscal year, ending in December, analysts expect BIIB’s EPS to grow 11.7% to $16.44 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the 32 analysts covering BIIB stock, the consensus is a “Moderate Buy.” That’s based on 18 “Strong Buy” ratings, one “Moderate Buy,” and 13 “Holds.”
This configuration is less bullish than a month ago, with 19 analysts suggesting a “Strong Buy,” and two analysts recommending a “Moderate Buy.”
On Nov. 21, Mizuho kept an “Outperform” rating and lowered the price target on BIIB to $207, implying a potential upside of 31.1% from current levels.
The mean price target of $249.76 represents a 58.2% premium to BIIB’s current price levels. The Street-high price target of $342 suggests an ambitious upside potential of 116.6%.
