On Thursday, Morgan Stanley initiated coverage on a number of biotech companies, rating both Amgen (NASDAQ: AMGN) and Biogen (NASDAQ: BIIB) at Overweight.

Analyst Matthew Harrison expects total group revenues to “double from $175B over the last 5 years to $335B over the next 5 years and total cash flows to triple from $31B to $95B.”

Biogen - Overweight, $395 price target
Harrison's “top pick.” The analyst believes Biogen outperform current consensus estimates with “upside launches in Europe for Tecfidera and Hemophilia.

Amgen - Overweight, $140 price target
While investors search for the next mega blockbuster drug release, Amgen is being “overlooked,” Harrison said. The company has “significant margin flexibility that comes with the Enbrel step downs (estimate ~1.4B through 2016) - that will allow it to deliver predictable, growing (or stable in a downside scenario) cash flows.

Regeneron (NASDAQ: REGN) - Equalweight, $320 price target
Based on AlphaWise survey work and analysis of a competitive launch in DEM by Roche's Luncentis, Harrison concludes “DME launch can achieve ~500M in 2015E sales,” which is in-line with consensus.

Celegene (NASDAQ: CELG) - Equalweight, $150 price target
70 percent of the company's revenues are from Revlimid, which is the subject of a patent challenge. The drug's revenues “could be at risk much earlier than consensus expectations of 2027E,” said the analyst.

Gilead (NASDAQ: GILD) - Equalweight, $75 price target
“High efficacy agents suggest risk in HIV from generic competition and risk in HCV from depleting the patient pool which may have been overlooked as investors kept their eyes focused on the blockbuster's peaks,” Harrison said.

Pharmacylics (NASDAQ: PCYC) - Equalweight, $120 price target
Given Rituxan sales and market share, Harrison believes “investors have priced in a scenario that expects multi-year duration of use of Imbruvica for each patient (~30 months) and significant market share (peak share of ~40%) across all indications.” However, many patients are un-treated given the slow progression of their disease, so there is “potential market expansion which could increase revenue estimates further,” said the analyst.