On Tuesday, RBC Capital Markets adjusted its outlook on Biogen (NASDAQ:BIIB) stock, with analyst Brian Abrahams reducing the price target to $231 from the previous $260. Despite this change, the firm maintained an Outperform rating on the biotechnology company's shares, which currently trade at $153.27. According to InvestingPro data, the stock is trading near its 52-week low, with a market capitalization of $22.3 billion.
Abrahams noted that Biogen's stock might be nearing a low point, influenced by a slower uptake than anticipated for the company's Alzheimer's drug, Leqembi. Despite recent challenges, the company maintains strong fundamentals with a gross profit margin of 75.59% and trades at a P/E ratio of 13.76.
Moreover, he pointed out the limited opportunities in the near-term (NT) pipeline and the impact of generic competition on Biogen's multiple sclerosis (MS) treatments. However, he believes that the downside potential is now limited.
The analyst expressed optimism about the future, citing the potential for Biogen's Alzheimer's franchise, particularly with the subcutaneous prospects of Leqembi from 2026 onward. According to Abrahams, there is a significant upside if the Alzheimer's treatments succeed, driven by strong demand from physicians for the anti-amyloid class of drugs and the competitive profiles of Biogen's immunology and inflammation (I&I) programs.
Abrahams also suggested that any further downside could be mitigated by additional cost-cutting measures and strategic business development initiatives. He expects Biogen's core MS franchise and Spinraza revenues to be flat or decline over the long term but emphasized that they will still contribute meaningfully to the company's financials.
Concluding his assessment, Abrahams reiterated that despite the challenges facing Biogen, the current stock levels present a favorable setup for investors. This view aligns with InvestingPro analysis, which indicates the stock is currently undervalued.
Investors seeking deeper insights can access comprehensive valuation metrics and 10 additional ProTips through InvestingPro's detailed research reports, available for over 1,400 US stocks including Biogen.
In other recent news, Biogen has been the focus of various analyst adjustments and significant developments. The biotechnology company witnessed a series of stock rating downgrades from Piper Sandler, BMO Capital Markets, and Jefferies, citing concerns over revenue outlook, slower growth for Alzheimer's treatment, Leqembi, and potential decline in Ocrevus royalties.
On the other hand, Baird increased its price target for Biogen to $300, following the European Medicines Agency's Committee for Medicinal Products for Human Use (CHMP) positive reexamination recommendation for lecanemab, a treatment for early Alzheimer's disease.
Furthermore, the CHMP of the European Medicines Agency has recommended approval for lecanemab, a drug developed by Eisai and Biogen for Alzheimer's disease, after a previous negative opinion was re-examined.
Citi initiated Biogen coverage with a neutral rating and a $190 price target, reflecting a cautious stance on the company's financial outlook. These recent developments provide investors with crucial insights into Biogen's current financial status and future prospects.
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