Jefferies Downgrades Biogen (BIIB) to Hold; Thesis Nearly Played Out
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Jefferies downgraded Biogen (NASDAQ: BIIB) from Buy to Hold but raises its price target to $323.00, on valuation as their thesis has mostly played out and with shares now better reflecting the balance of fundamentals.
Analyst Brian Abrahams commented, "We are downgrading BIIB primarily based on valuation, as our thesis on the company has generally played out. While a takeover at a premium is still possible, potential likelihood and timing are difficult to predict, and some M&A expectation may already be incorporated in the share price. We believe current valuation, after having appreciated 40% in the past ~2mo, now better reflects the favorable fundamentals -- potential medium-term cash flows from their stabilizing MS franchise and improving operating leverage, nucinerin's recent success, last week's additional supportive aducanumab titration data in Alzheimer's, and the potential for favorable near-term IP developments -- balanced by long-term headwinds of competition, slowing growth, and need for diversification. Based on an increase in our estimated probability of success for aducanumab (to 60% from 45%) stemming from additional data last week, our DCF-based price target increases to $323; nonetheless, at current levels, we see less compelling upside opportunity vs. certain other large-caps, though we acknowledge M&A speculation may help provide a floor."
Shares of Biogen closed at $313.59 yesterday.
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