BIIB Stock: What to Know Before Biogen Earnings

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On Wednesday morning, before the market opens, biotechnology company Biogen (BIIB) will be unveiling its third-quarter results.

BIIB Stock: What to Know Before Biogen EarningsWhile all quarterly reports are scrutinized by someone, this particular Biogen earnings news is going to be watched by everyone because it’s the one that could make or break BIIB stock.

How so? While Biogen is relatively diverse outfit, its single best-selling drug hit a wall during the second quarter, and there’s a good chance things are going get worse before they get better.

Wednesday morning will confirm or deny that presumption, and as a result could either crush or catapult BIIB shares.

Buckle up, BIIB stock holders.

Biogen Earnings Outlook

As of the latest numbers, the pros are expecting Biogen to post earnings of $3.80 per share on sales of $2.65 billion. Per share earnings are in line with the $3.80 BIIB stock earned in the third quarter of 2014, while the projected top line is 5.3% stronger than the year-ago revenue total of $2.51 billion.

If there was ever a time to count on absolutely nothing — good or bad — from a biotech stock, though, the Biogen earnings report is probably it.

The drug that hit a sales wall is multiple sclerosis treatment Tecfidera. Although the drug made good headway after launching in the United States in early 2013 (as well as its European launch in 2014), time and reality finally caught up to the company in the second quarter of this year.

The slowdown was so pronounced, in fact, that Biogen announced on July 24 it was lowering its full-year profit outlook from a range of $16.60 to $17.00 per share to a range of only $15.50 to $15.95 per share of BIIB.

One of those realities is the simple fact that Tecfidera has been linked (maybe accurately, maybe not) to a brain infection called progressive multifocal leukoencephalopathy.

But even without that risk, adoption of the orally-administered drug was hitting headwinds for other reasons. For instance, Tecfidera uptake has suffered from fewer users switching from Avonex — a rival MS drug — in favor of sticking with Biogen’s own interferon-based drug, Plegridy.

3 Things for BIIB Owners to Mull

While Biogen is a multifaceted company (and as such Wednesday’s earnings report will give the market plenty to think about), three key factors are apt to push BIIB stock around more than the rest.

Tecfidera: Tecfidera is the 800-pound gorilla in the room. If BIIB stock is to move higher, sales and earnings will have to improve, and for sales and earnings to improve, Tecfidera needs to do well — it made up 33% of the company’s total revenue in Q2. While sales have technically been growing, the company needs to convince investors that it knows exactly why growth is slowing, and that it knows exactly how to fix it. It’s the “convincing” aspect that’s been lacking so far.

Alzheimer Drug Progress: With all eyes on Tecfidera, most eyes have been taken off of Biogen’s Alzheimer’s drug, aducanumab. Although the 6 mg dose yielded disappointing results around the middle of the year, the company is holding on to hope that there’s still something effective enough in the midst of the failure to merit continuing the work. Jeffries gives the drug less than a 50% chance of approval, but should it somehow be approved, Jeffries also believes peak sales will be in excess of $3 billion.

Acquisitions: Most biotech companies always have something of any eye out for potential acquisitions, but few seem to have their eyes peeled as much as Biogen does right now. And, it needs one to offset the void being left behind by waning Tecfidera sales and the hole that will remain unfilled by aducanumab. It’s unlikely the company will divulge any specific acquisition news with earnings, but it may clarify some of its plans and drop a few hints.

Bottom Line for BIIB Stock

While the value of BIIB stock seems to have more working against it than for it, investors may want to bear in mind that even on its worst days, the company is still profitable.

Even if it doesn’t see any growth at all for its third quarter, it still has a portfolio that drives positive cash flow, which if nothing else can facilitate the acquisition of growth prospects.

In other words, the sizable lost this year may be an opportunity. Should BIIB lose even more ground after the Biogen earnings news is unveiled, it may well be a capitulatory move worth diving into.

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

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Article printed from InvestorPlace Media, https://investorplace.com/2015/10/biib-stock-biogen-earnings/.

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