Some on Wall Street think this company could really make waves if it were approached in a takeover situation. When Biogen Inc. (NASDAQ: BIIB) reported second-quarter earnings that were far below Wall Street estimates, the stock dropped 22%, mainly because the biotech giant substantially reduced its full-year 2015 outlook. Biogen’s blockbuster drug Tecfidera registered much lower than expected revenue growth, resulting in low full-year guidance.
Merrill Lynch feels that the revised guidance may be very conservative, although the analyst does think that the corporate management team needs to point to specific drivers in the pipeline and current product offerings that can reaccelerate growth. With the Phase 3 trials for Aducanumab presenting a potential huge upside, and continued Tysabri efforts are very important, investors may have a chance to buy the prime biotech leader well off the highs.
The Merrill Lynch price target was dropped to $400 from $466. The consensus price target is $389.93. The stock closed on Friday at $309, down almost 2.5%.
This remains one of the favorites among portfolio managers. Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) has been a performance monster over the past two years, and most Wall Street firms expect it to stay one. With treatments for everything from macular degeneration to colorectal cancer, the company continues to exploit an extraordinary pipeline.
The analysts are positive on the company’s prospects for solid but perhaps not spectacular Eylea growth, and others on Wall Street cite Alirocumab, which is another new cholesterol drug with big expected upside. Dupilumab sales could peak at $10 billion a year, assuming $6 billion from the AD indication, with the remainder coming from asthma and nasal polyposis, for which the drug is also being tested.
The company reported second-quarter earnings of $2.89 a share excluding one-time items, up 17% from a year earlier and revenue jumped huge to $999 million. Both were well above analysts’ consensus estimates. The Merrill Lynch analysts noted that the initial launch of Praluent may be gradual, but they remain bullish on the ultimate commercial opportunity given very large size of the market.
The Merrill Lynch price target for this biotech monster is $649, and the consensus target set at $615.14. Shares closed on Friday at $579.04.
While large cap biotech stocks are still more suited for very aggressive growth portfolios, buying these market leaders makes good sense. With history indicating that interest rate increases should have zero impact, investors can feel good initiating or adding to positions.