Stock Analysis & Ideas

Biogen Stock: Clinical Wins Support a Bullish Thesis

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It’s been an eventful summer for Biogen with the company’s ongoing battle against debilitating diseases. At the same time, a terrific bottom-line beat puts Biogen in the top tier of healthcare heroes.

I am bullish on Biogen (BIIB) stock. The company’s clinical momentum is heating up this summer, with one win after another. Plus, Biogen’s earnings growth is indisputable.

Biogen is known for developing treatments for neurological and neurodegenerative diseases. The company is known as a pioneer for developing the “first and only approved treatment to address a defining pathology of Alzheimer’s disease.”

Often, the trajectory of a healthcare stock will be determined by a company’s progress in achieving clinical milestones as well as revenue and profits. Biogen has a long history of winning on both of these fronts.

The company’s track record was tested not long ago during an earnings event. However, on the whole, investors should find that Biogen made the grade as a financially and clinically solid disease-fighting firm for the 2020s.

Biogen: A Healthcare Giant with Recent Clinical and Regulatory Victories

Sometimes, traders wager on tiny biotechnology businesses in hopes of quick gains. These types of investments might work out well, or they can result in substantial capital losses. Biogen, in contrast, is a giant company with a $30.9 billion market cap and thousands of full-time employees. Besides, in the area of recent clinical and regulatory wins, Biogen is proving itself time and again.

Just this summer alone has been a wellspring of great news for Biogen and the company’s stakeholders. There’s a lot to cover here, so here are the highlights that any current or prospective Biogen stockholder should know about.

In early June, Biogen and Bio-Thera Solutions presented positive Phase 3 data for investigational biosimilar candidate BIIB800. It was found that in patients with moderate-to-severe rheumatoid arthritis with an inadequate response to methotrexate, BIIB800 had equivalent efficacy and comparable safety and immunogenicity to tocilizumab.

Just a few days later, Biogen announced a license and collaboration agreement with Alectos Therapeutics to develop and commercialize a selective GBA2 inhibitor called AL01811. This product could potentially serve as an orally administered, disease-modifying treatment for Parkinson’s disease.

Also, in June, the European Patent Office granted Biogen a patent related to TECFIDERA (dimethyl fumarate). This patent, which expires in February 2028, is intended to treat relapsing forms of multiple sclerosis in adults.

Fast-forward to July, and the U.S. Food and Drug Administration (FDA) approved the Biologics License Application (BLA) under the accelerated approval pathway for lecanemab.

That drug is Biogen’s and Japanese pharmaceutical firm Eisai’s (ESALY) proposed treatment for mild cognitive impairment due to Alzheimer’s disease and mild Alzheimer’s disease (collectively known as early Alzheimer’s disease) with a confirmed presence of amyloid pathology in the brain. Along with the BLA, the FDA also granted priority review for lecanemab.

Biogen’s CEO Michel Vounatsos seemed particularly proud of that last achievement. “We believe in a future where people living with Alzheimer’s disease will have different treatment options to address this complex disease, and today’s BLA acceptance with priority review by FDA is an important step towards this vision,” Vounatsos commented.

Biogen’s Earnings Beat Should Quell the Critics’ Concerns

The skeptics can’t deny Biogen’s recent clinical/regulatory milestones. However, they might point to a quarterly decline in the company’s revenue. Still, Biogen’s bottom-line beat ought to convince the critics that the company is on the right fiscal track.

If you read the headlines in the financial press, your takeaway might be that Biogen posted a top-line miss for 2022’s second quarter and that Biogen stock consequently fell 2.8%. Yet, there’s more to the story than this.

It is true that traders had a negative reaction to Biogen’s Q2-2022 results. The decline in the share price comes with a silver lining, though. Biogen now has a trailing 12-month P/E ratio of 15.8, which value hunters should find irresistible.

Besides, investors might question whether Biogen’s revenue was really a miss. In 2022’s second quarter, the company generated revenue of roughly $2.59 billion, down 7% year-over-year. On the other hand, that result beat the Zacks consensus estimate of $2.47 billion.

Turning to the bottom-line results for Q2 2022, Biogen recorded diluted EPS of $5.25, which admittedly was a drop-off from the year-earlier quarter’s $5.68 per share. Yet, this result easily beat Wall Street’s $4.06 per share expectations.

Perhaps most encouragingly, Biogen raised both its top-line and bottom-line guidance for full-year 2022. Specifically, the company increased its 2022 revenue guidance from $9.7 billion – $10 billion to $9.9 billion – $10.1 billion. Also, Biogen hiked its 2022 non-GAAP diluted EPS guidance from $14.25 – $16 to $15.25 – $16.75.

Wall Street’s Take on BIIB Stock

Turning to Wall Street, BIIB stock is a Moderate Buy based on 10 Buys and 10 Hold ratings. The average Biogen price target is $238.58, implying 12.1% upside potential.

Biogen’s Progress Makes the Stock a Potential Long-Term Winner

The only sticking point here, really, is that Biogen’s quarterly revenue declined. It wasn’t a massive decline, though, and the company posted an undeniable bottom-line beat. This, along with Biogen’s raised fiscal guidance and clinical/regulatory achievements, makes Biogen stock a likely winner for the long term.

So, I wouldn’t worry too much about any headline that calls Biogen’s recent quarterly results a “miss.” There’s plenty to celebrate as Biogen advances potentially life-improving treatments for hard-to-treat conditions.


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