Biogen Is A Frustrating Case, And Piper Jaffray Hopes It Doesn't Regret Upgrade

The current valuation of Biogen Inc’s BIIB stock represents “a reasonable entry for the Alzheimer's and SMA franchises as well as a couple of other pipeline programs that seem interesting,” Piper Jaffray’s Joshua E. Schimmer said in a report.

He upgraded shares from Neutral to Overweight, and established a price target of $335.

Upgrade May Prove Wrong

Biogen has deteriorated during the outgoing CEO’s tenure and has “an overly speculative pipeline, an eroding MS business, multiple evolving competitive threats, and minimal M&A relative to its needs,” Schimmer pointed out. He added, however, that the company has time to “get its act together.”

Schimmer believes Biogen would benefit from efforts to maximize the value of its SMA franchise, and needs to become more disciplined vis-a-vis its pipeline. Referring to the upgrade, the analyst commented, “We hope BIIB doesn't make us regret this decision.”

Biogen’s pipeline has some potential. Nusinersen could be significant, even if AVXS-101 captures a meaningful share of the market. If Aducanumab works, the upside to the company’s shares would be “tremendous,” Schimmer commented, adding, “BIIB074 for pain and IONIS-DMPK-2.5Rx for myotonic dystrophy are both interesting.”

Nationwide Fund Advisors raised its stake in Biogen by 52.4 percent during the second quarter, according to the company’s latest disclosure with the SEC.