On Feb. 20, Cantor Fitzgerald analyst Eric Schmidt restated his aggressive price target for Biogen, (BIIB 1.82%) estimating that the biopharmaceutical stock will rise by 39% to reach roughly $311. One driver for that anticipated growth is the company’s newly launched drug called Leqembi, which aims to treat Alzheimer’s disease. But Leqembi is just one of four recent launches, with the other medicines treating conditions like postpartum depression and amyotrophic lateral sclerosis (ALS).
Schmidt is likely to be mindful of the fact that Biogen has four upcoming data readouts from programs that management thinks could be significant future contributors to the stock’s performance. Likewise, its ongoing cost-cutting campaign aiming to save $1 billion by 2025 is in full swing, and it should continue to support the bottom line. But should investors consider buying it at around its current price of $223?
There are multiple trends at play here for Biogen
Biogen’s top line was close to flat in 2023 on a constant currency basis, totalling $9.8 billion. Furthermore, its diluted earnings per share (EPS) fell by 62%, reaching $7.97 for the year. Cost-cutting alone will not be sufficient to stoke growth.
Despite the new drug launches, management expects revenue to decline by roughly 1% to 5% this year. That does not bode well for the prospect of its fresh products driving enough growth to satisfy investors in the near term.
But if Leqembi and another drug get approved in the European Union in the first half of this year, as management is banking on, the stock will still likely rise a bit. And, toward the end of this year and into next year, sales could start to pick up. 2025 could easily be a good year for shareholders.
Nonetheless, other pharma stocks are much more appealing to buy right now. Avoid investing until there’s a stronger set of catalysts coming up.
