How to Trade Biogen Inc (BIIB) Stock After Its Q4 Beat

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Biogen Inc (NASDAQ:BIIB) stepped into the earnings confessional this morning, and the 22% year-over-year decline in earnings were less inspiring than analysts were hoping for. Yes, adjusted earnings of $5.04 per share came in higher than the consensus target for $4.96 per share.

However, the 1% rise in revenue to $2.87 billion wasn’t enough to hit the $2.94 billion mark Wall Street was looking for.

There were some highlights, however, as sales of Biogen’s multiple sclerosis drug Tecfidera came in at $1 billion on the quarter to make up roughly 40% of product revenue. The company’s two hemophilia drugs saw much faster growth, bringing in $242 million combined. However, Tecfidera results were marred by a $454.8 million litigation settlement and licensing charges.

BIIB stock traders appear to have decided that the results were good enough, with the shares trading higher by more than 1% heading into the open. Technically speaking, Biogen needs some positive momentum after plunging more than 14.5% since November.

That said, while Biogen stock is bouncing off its early-November lows, shares still face overhead resistance at $280 and their 200-day moving average in the $285 region.

Despite this poor price action, analysts remain in high spirits when it comes to Biogen stock. Currently, data from Thomson/First Call reveals that 16 of the 25 analysts following BIIB stock rate it a “buy” or better, with no “sell” ratings to be had. Furthermore, the 12-month consensus price target of $340.51 represents a healthy premium of about 24% to yesterday’s close.

However, given the lack of any major bullish news in this morning’s quarterly report, analysts may be reluctant to upgrade BIIB stock or boost their price targets.

BIIB Stock
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Options traders, meanwhile, are decidedly bearish on BIIB’s prospects.  As of the close yesterday, the February put/call open interest ratio rested at 1.49, with puts easily outnumbering calls among options set to expire next month.

Currently, peak Feb. put OI totals 4,300 contracts at the out-of-the-money $270, with another 3,700 at the in-the-money $390 strike. Peak Feb. call OI, meanwhile, numbers 4,300 contracts at the $300 strike.

While these strikes may seem out the realm of possibility, implieds are pricing in a potential 8.4% move through February expiration. This places the upper bound just shy of $300 and the lower bound at about $252.

With BIIB trading near oversold levels, and nothing horrible in today’s quarterly report, the shares should be able to ride the broad-market rally higher off this near-term bottom.

2 Trades for BIIB Stock

Call Spread: For those traders looking to capitalize on bullish market headwinds and bargain hunting action in Biogen stock, a Feb $275/$285 bull call spread could fit the bill.

At last check, this trade was offered at $4.25, or $425 per pair of contracts. Breakeven lies at $279.25, while a maximum profit of $5.75, or $575 per pair of contracts, is possible if BIIB closes at or above $285 when February options expire.

Put Sell: Alternately, if you’re not sold on a BIIB rally, a Feb $270 put sell might be a way to capitalize on technical support.

At last check, this put was bid at $9.50, or $950 per contract. The upside to this put sell strategy is that you keep the premium as long as BIIB stock closes above $270 when February options expire next month. The downside is that should BIIB trade below $270 ahead of expiration, you could be assigned 100 shares for each sold put at a cost of $270 per share.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2017/01/trade-biogen-inc-biib-stock-q4-beat/.

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