Baird Cuts Biogen Rating, Says Near-Term Growth 'Diminished'

In a report published Monday, Baird analyst Brian P. Skorney downgraded the rating on Biogen Inc (ADR) BIIB to Neutral, while reducing the price target from $480 to $316, after the company reported lackluster sales and reduced its guidance significantly. Biogen reported disappointing 2Q15 results, with revenues of $2.6 billion falling short of the Baird estimate of $2.7 billion. The company's EPS of $4.22 was, however, above the Baird estimate of $4.13 and reflected strong operating leverage. In the report Baird noted, "Tecfidera sales came in $57M short of our estimates with $883M in WW sales ($721M US/$163M ROW). Biogen missed consensus by about ~$38M. Despite sales growing 7% from the prior quarter, management guided future sales to have minimal growth for the remainder of the year, attributed to the limited patient growth in the United States." The slowdown may be attributable to a change in perception following the PML case besides increased competitive pressures, analyst Brian Skorney said. "The quarter was so disappointing that we're inclined to think this could be a kitchen sink. However, with increasing competition and pricing pressures in MS and nothing on the near-term horizon set to launch, we'd rather wait and see if company is managing expectations to beat or if there is another leg down," Skorney added. Biogen also reduced its FY revenue growth guidance drastically from 14-16 percent to 6-8 percent.