Shares of the biotechnology company Biogen (BIIB) have caught the eye of investors ever since the U.S. FDA (Food and Drug Administration) granted accelerated approval to Aduhelm, its Alzheimer’s disease drug, on June 7.
Following the announcement, Biogen stock closed 38% higher on June 7. However, it has trended lower and is down over 16% since then. (See Biogen stock charts on TipRanks)
Despite Aduhelm’s FDA approval, Salim Syed of Mizuho Securities reiterated his Hold rating on Biogen stock. However, he increased the price target to $300 (9.6% downside potential) from $244 to “account for Aduhelm’s FDA approval.”
Syed termed the Street’s consensus for Aduhelm as “high” and stated that the consensus does not reflect “all the risk involved.” In a note to investors, Syed said that his model reflects Aduhelm’s peak sales of approximately $6 billion, including $4.5 billion in the U.S. and about 1.8 billion in Europe, compared to the Street’s estimates of about $8.5 billion.
Syed mentioned that the EMA (European Medicines Agency) had not approved Aduhelm, and also cited P&T (Pharmacy and Therapeutics) approval risks, among other risks that could “potentially push consensus peak sales lower.”
The analyst further added that the “Street may not be accounting for the non-controlling interest (NCI) line in the DCF (discounted cash flow).” Syed said, “We asked Biogen if the Street is properly capturing NCI in models (and namely in the DCF), and Biogen responded that it was not willing to opine.”
Nevertheless, Biogen raised its full-year revenue guidance following Aduhelm’s FDA approval. It now expects 2021 revenue to be in the range of $10.65 billion – $10.85 billion compared to its prior guidance of $10.45 billion – $10.75 billion.
The company’s CFO, Mike McDonnell, explained the change, saying, “Our guidance continues to assume modest ADUHELM revenue in 2021.” He expects revenue to ramp up in 2022 and beyond.
On TipRanks, Biogen stock has a Moderate Buy consensus rating, based on 15 Buys and 13 Holds. The average Biogen price target of $433.38 implies 30.7% upside potential to current levels. Furthermore, Biogen stock scores a “Perfect 10” on TipRanks’ Smart Score system.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
