There’s no question that the biotechnology industry has been under pressure since it peaked in July 2015. However, the iShares Nasdaq Biotechnology Index (ETF) (NASDAQ:IBB) recently rallied to close above key resistance at its 200-day moving average, which tells me that we could see this rally pick up steam in the near-term. The winners will set themselves apart from the laggards over time, but the one name I like a lot right now is Biogen Inc (NASDAQ:BIIB).
For those of you who are unfamiliar with the company, Biogen is one of the world’s leading biotechnology companies working to develop and commercialize innovative therapies for illnesses with few, if any, treatment options.
BIIB has the greatest portfolio of multiple sclerosis therapies and it is known for its innovative treatments for hemophilia patients.
BIIB Stock Demands Attention
In terms of its investment potential, BIIB stock is mostly a value play, as it is one of the pillars of the biotech industry. It has a long track record of profitability — the company earned $5.21 a share in its recently reported second-quarter results and expects profit of $19.70 to $20 a share for the year — and I think it makes an enticing takeover target for a large drugmaker.
In fact, Biogen soared earlier last week on reports that the company had generated takeover interest from Merck & Co., Inc. (NYSE:MRK) and Allergan plc Ordinary Shares (NYSE:AGN). There’s no hiding the fact that BIIB has had management issues in the past — CEO George Scangos announced in July that he would be leaving the company once a replacement was found — but that simply makes it that much more vulnerable in the near-term.
If a deal doesn’t happen, BIIB is undervalued. It has bounced an unbelievable 41% off its post-Brexit lows, but I think BIIB stock still has plenty of room to run higher. In fact, I think it could tack on 100 points or more over the course of the next 52 weeks.
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