UBS: Buy Biogen For Pipeline, M&A Potential

Some on the Street consider Biogen Inc BIIB’s bull thesis to be largely played out. But one analyst sees room for 15-percent upside. 

The Rating

UBS analyst Carter Gould upgraded Biogen to Buy and raised their price target from $318 to $410.

The Thesis

Biogen’s existing pipeline and potential asset acquisitions through 2018 present a $45-a-share opportunity, Gould said in a Wednesday note. 

Stabilization of the biotech’s multiple sclerosis business, clarity on negative Spinraza growth and 2019 data on the aducanumab Alzheimer’s trial affirm the “core pillars” of Biogen valuation and earnings per share estimates and positively skew the risk-reward, the analyst said.

“The current share price still implies minimal (if any) value for these assets,” the analyst said. “While these are high-risk programs, they (1) all have blockbuster potential, and (2) are not in Street models — implying success for any one likely drives upside from here.”

The pipeline compounds “increasing likelihood” that Biogen buys new assets with its $37-billion in capital, Gould said. 

The analyst said he expects a 2018 focus on the midstage neurology portfolio with trial results for stroke, neuropathic pain, Parkinson’s disease and amyotrophic lateral sclerosis. The indications are presently excluded from Street models and together represent a sales opportunity between $9 billion and $17 billion, according to UBS. 

Price Action

At the time of publication, shares were set to open up 1.4 percent at $357.55.

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