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Bernstein Upgrades Biogen On 'Compelling' Pipeline, Stock Now Undervalued

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Bernstein Upgrades Biogen On 'Compelling' Pipeline, Stock Now Undervalued
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In a report published Monday, Bernstein analyst Geoffrey C. Porges upgraded the rating on Biogen Inc (NASDAQ: BIIB) from Market-Perform to Outperform, while reducing the price target from $436 to $385.

Analyst Geoffrey Porges said that the company's stock had been "on a roller coaster ride" since late last year. Biogen's shares jumped more than 50 percent on excitement surrounding the Alzheimer's drug aducanumab. After reporting two straight quarters of disappointing sales from its core business, particularly Tecfidera, the company witnessed its stock plummeting to $300 on Friday.

Porges considers the recent decline as "an overreaction," saying, "While we saw little reason to chase the stock at its post-aducanumab highs, we believe the current price presents an attractive entry point into a stock which still boasts a solid and highly profitable core business and a pipeline of high risk, but very high value assets."

Moreover, Biogen has a "pristine" balance sheet which "will either be used by the company, or by its predators, to the benefit of investors in either case."

The revenue estimates for 2015 and 2016 have been reduced by 6-7 percent. The EPS estimates for 2015 and 2016 have been reduced from $16.72 to $16.48 and from $17.84 to $16.87, respectively. Both these are below the consensus estimates, which are likely to come down going ahead.

In the report Bernstein noted, "At the stock's closing price on Friday of $300 we readily find 25-30% upside, and long term the stock could offer considerably more, should one or more of the key pipeline programs come to fruition, or if the board and management team start to use their balance sheet productively (or face the threat or opportunity of it being used against them)."

Latest Ratings for BIIB

DateFirmActionFromTo
Aug 2018Stifel NicolausReinstatesBuy
Jul 2018UBSMaintainsBuyBuy
Jul 2018BarclaysMaintainsEqual-WeightEqual-Weight

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