Less than a month after upgrading Biogen to Buy, Goldman Sachs adds the stock to its Conviction List.
Biogen (BIIB) has had a good, though not great year. Is it time to add it to your portfolio?
Shares of Biogen have gained 11.5% so far this year, and while that’s better than the S&P 500’s 10.3% rise during the same, its lagged the iShares Nasdaq Biotechnology ETF’s (IBB) 17%, while Celgene (CELG), Amgen (AMGN), and Regeneron Pharmaceuticals (REGN) have all outperformed it to some degree.
So why are Goldman Sachs analysts Terence Flynn and Cameron Bradshaw, who upgraded Biogen to Buy on July 26, adding Biogen to the firm’s conviction list? I’ll let them explain:
We add Buy-rated BIIB to the Americas Conviction List, with 17% upside to our unchanged 12-month $338 price target. We continue to see optionality on lead pipeline Alzheimer’s drug, Aducanumab, which, based on our expectation for Ph3 data in 4Q19/1Q20, could be one of the first disease modifying drugs to reach the market. Our peak sales projection is $12bn, risk adjusted by 50%. On BIIB’s base MS franchise, we view investor concerns on competition and pricing as overblown. Finally, BIIB has a relatively under-levered balance sheet, and we expect FCF yield and US cash to grow.
Shares of Biogen have gained 1.5% to $292.16 at 9:53 a.m. today, while Celgene is little changed at $131.34, Amgen has risen 0.6% to $171.08, and Regeneron Pharmaceuticals has dipped 0.1% to $472.25. The iShares Nasdaq Biotechnology ETF has advanced 0.4% to $310.50.