Biogen (BIIB) stock has enjoyed market-walloping upside over the last year. Before the second-quarter earnings announcement, shares were up 26% in that time, more than four times the 6% returns of the S&P 500.
Ah, what a difference a day can make.
Those market-beating returns became much less impressive after Friday morning’s earnings announcement, which saw Biogen stock sell off to the tune of 16%, shedding more than $14 billion from its market cap in mere minutes.
The issue? BIIB stock is plunging after revenue growth came in far below expectations. And although earnings per share came in above estimates, the company lowered its full-year EPS and revenue guidance. Wall Street hates when you do that.
Unfortunately, this is now the second-straight quarter in which BIIB sales have come in below estimates, and the fairy tale run BIIB’s been on over the past year is — as far as I’m concerned — officially over.
Biogen Earnings by the Numbers
Biogen’s disappointing numbers didn’t just pull its stock down — it dragged an entire ETF with it to boot. The iShares NASDAQ Biotechnology Index (IBB) was down nearly 2% on Friday, largely thanks to BIIB. Up 57% over the last year, IBB’s fourth-largest holding was Biogen before the stock’s miserable performance today.
Let’s break out those cringe-inducing numbers:
EPS was the only thing that BIIB managed to beat on, clocking in at $4.22 vs. the consensus of $4.10. Revenue, however, came in at $2.59 billion, a far cry from the $2.71 billion Wall Street expected. Driving that miss was lackluster sales from a number of the company’s key products — causing Biogen management to slash fiscal year 2015 revenue projections from 14 to 16% to the 6 to 8% range. FY15 EPS guidance was also cut from the $16.60 to $17 range to the $15.50 to $15.95 range.
Yikes.
Breaking out the BIIB revenue miss by drug, the company’s best-selling drug, the multiple sclerosis treatment Tecfidera, logged $833 million in revenue, a full $100 million below expectations.
A small portfolio of other MS drugs also underperformed: Combined sales of Tysabri, Avonex and Plegridy accumulated $1.15 billion last quarter, falling short of the $1.27 billion analysts wanted.
Today’s slump is a continuation of the steep selloff that’s plagued shares since March, when BIIB stock peaked at $480 per share. The rapid run-up from December to March — shares roared 60% higher in just 4 months on anticipation of Biogen’s Alzheimer’s candidate aducanumab — just wasn’t sustainable.
It was with this in mind that InvestorPlace‘s own Craig Adeyanju cautioned that investors could be getting too optimistic about BIIB stock in late March. Said Adeyanju:
“…the best-case scenario could be that the drug would be approved for mild AD, thereby reducing its market potential. So the wild run in BIIB might be overly optimistic and overdone.”
Indeed, the run was optimistic and overdone.
And now its over, done.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
