Wolfe Research upgrades Biogen, AbbVie on pipeline strength and valuation

Investing.com -- Wolfe Research upgraded two major pharmaceutical companies to Outperform on Thursday, citing stronger growth prospects, attractive valuations and a series of upcoming clinical catalysts.

For Biogen, Wolfe raised its rating from Peer Perform and set a $300 price target, arguing that the company's late-stage pipeline offers significant upside that is not fully reflected in current valuations. The firm highlighted litifilimab and felzartamab as key assets, with clinical readouts expected over the coming year.

Wolfe said litifilimab could become the first biologic approved for cutaneous lupus erythematosus, while felzartamab could represent a larger commercial opportunity in antibody-mediated rejection than currently assumed by the Street. The firm also pointed to Biogen's acquisition of Apellis Pharmaceuticals as strengthening its near-term revenue base through Empaveli and Syfovre.

The firm also sees Biogen's valuation as compelling, with the company trading at a discount to the broader market despite progress in Leqembi, its pipeline and commercial execution. Wolfe expects the company's earnings growth to accelerate, with potential pipeline wins providing further upside.

For AbbVie, Wolfe also raised its rating to Outperform from Peer Perform and set a $300 price target, citing an attractive valuation, limited near-term loss-of-exclusivity exposure and a solid catalyst pipeline. The firm said AbbVie's 2027 earnings multiple of 14.6 times appeared too low for a company expected to deliver high-single-digit revenue growth for the rest of the decade.

Wolfe said AbbVie's patent position further differentiates the company from peers, noting that Rinvoq's expected generic entry has been pushed out to 2037 and that the company is defending Skyrizi's patent estate. This could leave AbbVie without a major patent cliff this decade, allowing investors to focus on pipeline and commercial catalysts.

The firm highlighted upcoming results for Rinvoq and lutikizumab, etentamig, and Ubrelvy and Qulipta, as well as later-stage opportunities including ABBV-382 in Crohn's disease, bretisilocin in major depressive disorder and ABBV-619, an in-vivo CAR-T therapy. Wolfe also said AbbVie's strong balance sheet could support additional acquisitions.

Wolfe expects AbbVie's valuation and commercial execution to support further share gains, while its strong balance sheet and recent acquisition activity provide additional optionality.

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