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Morgan Stanley Adjusts Their View Of Biogen After Spinoff

Morgan Stanley Adjusts Their View Of Biogen After Spinoff
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Biogen Inc (NASDAQ: BIIB) published a Form 10 for its hemophilia spin-off, Bioverativ. Morgan Stanley’s Matthew Harrison maintained an Overweight rating on the company, while reducing the price target from $385 to $368. The analyst revised the Biogen model to remove Hemophilia estimates from 2017 onwards.

Updates To The Model

Biogen’s spin-off of its hemophilia assets is expected to be completed in early 2017. Analyst Harrison mentioned the following updates to the Biogen model:

  • All hemophilia costs and revenues after 2016 have been removed. Consequently, the revenue estimates for 2017 and 2018 have been reduced by 7.3 percent and 7.4 percent, respectively.
  • The SG&A and R&D estimates for both 2017 and 2018 have both been reduced by 6.3 percent. These expenses have been reduced for 2017 onward by two-third of the total Bioverativ spending, which is $225 million for SG&A and $200 million for R&D, assuming some dis-synergies of the split.
  • The tax rate in 2017 and beyond has been reduced by 1 percent to reflect that the hemophilia assets carry a full statutory US tax rate, since the IP is US domiciled.

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“We also updated our hemophilia revenue ramps to better reflect competitor timelines to the market and the slope of the European launches which just began in early 2016,” Harrison wrote.

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