After a year of being beaten down by legions of sellers, the biotech segment of the health care sector is finally starting to make a move back for investors, and the potential for some of the top companies remains outstanding. With the cloud of severe pricing legislation starting to lift some, investors are focusing on fundamentals and near-term catalysts that could provide a tailwind for some of the biotech leaders.
In a series of recent research reports from the analysts at Jefferies, they pointed to companies with specific catalysts that could have a tremendous impact on shares. Three companies show up on the radar that all have the potential to move big for shareholders.
Jefferies is very bullish on this large cap biotech, and the stock is down over 30% from highs that were printed in March of last year. Biogen Inc. (NASDAQ: BIIB) discovers, develops and delivers to patients worldwide innovative therapies for the treatment of neurodegenerative diseases, hematologic conditions and autoimmune disorders. Founded in 1978, Biogen is one of the world’s oldest independent biotech companies, and patients worldwide benefit from its leading multiple sclerosis (MS) and innovative hemophilia therapies.
While many on Wall Street acknowledged in the past that the company’s core MS drug market is facing challenges going forward, with most diagnosed patients now treated, payers limiting net benefits from price increases and competing entrants expected. With those issues in mind, the firm is still positive on Tysabri, especially for secondary-progressive multiple sclerosis, with upcoming clinical data a big factor.
Biogen posted outstanding earnings in July and the stock has rallied sharply on rumors of a buyout by a large pharmaceutical company. The Jefferies analysts think the company is indeed a legitimate takeout candidate and cite Pfizer, Shire and Roche as companies that could be buyers, in addition to Merck and Allergan. They note that the potential to be a neuroscience bolt-on, the company’s consistent operating cash flows from the MS business and the recent CEO departure as all positives for a potential suitor.
The Jefferies price target for the stock is $319, and the Wall Street consensus target is $333.60. The stock closed Wednesday at $308.87 per share.