Morgan Stanley Double Upgrades Biogen, Says Alzheimer's Opportunity Ahead

Although Biogen Inc BIIB will face generic competitors for Tecfidera in the near term, the pricing in of aducanumab success may drive the stock to the mid-$300s, according to Morgan Stanley.

The Biogen Analyst: Matthew Harrison upgraded Biogen from Underweight to Overweight and raised the price target from $263 to $357.

The Biogen Thesis: "Stocks sometime run counter to expectations, as negative changes in business fundamentals can clear the way for significant upside catalysts," Harrison said in a Monday upgrade note. (See his track record here.)

Biogen has downside risk in the near-term due to generic launches for its multiple sclerosis drug Tecfidera, which contributes around 30% of the company’s total product sales, the analyst said.

Yet investors are likely to look past Tecfidera soon and focus on a higher probability of success for Biogen's investigational drug aducanumab, which is “the first potential disease modifying therapy for Alzheimer's disease,” he said. 

Biogen's stock reflects less than a 25% probability of success, but the market may soon price in at least 50% odds of success as the potential FDA approval date in March 2021 approaches, Harrison said. 

Morgan Stanley views Biogen as a “high-risk/high-reward” stock and believes that “now is the right time to take the risk.”

BIIB Price Action: Shares of Biogen were trading 4.29% higher at $284 at last check Monday.

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Posted In: Analyst ColorBiotechUpgradesPrice TargetAnalyst RatingsGeneralMatthew HarrisonMorgan Stanley
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