Is it safe to buy Biogen stock after boosting guidance ahead of Street forecasts?
- Biogen shares on Wednesday edged slightly higher after announcing its fiscal Q3 results.
- BIIB reported its most recent quarterly revenue and earnings before markets opened, beating estimates.
- The biotech company also boosted its FY2021 EPS ahead of the consensus analyst expectations.
On Wednesday, Biogen Inc. (NASDAQ:BIIB) shares edged slightly higher after announcing its most recent quarterly results. The company reported better-than-expected fiscal Q3 revenue and earnings whilst also boosting its full-year 2021 guidance.
The Cambridge MA-based biotech posted FQ3 non-GAAP earnings per share of $4.77, beating the average for analyst expectations of $4.09. However, its GAAP EPS of $2.22 missed Street estimates by 1.34, while revenue for the quarter of $2.78 was $110 million ahead of estimates despite plunging by 17.8% year-over-year.
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BIIB boosted its fiscal full-year 2021 EPS guidance to $18.85-$19.35 from $17.50-$19.00, ahead of the consensus Street forecast of $18.56.
Biogen shares have swung to a net year-to-date gain of about 11%, substantially below the S&P 500 Index’s gain of 22.53%, after plummeting by more than 35% over the last four months.
Biogen looks undervalued
From an investment perspective, Biogen shares trade at a compelling forward P/E ratio of 13.14, making the stock an attractive option for value investors.
However, with analysts forecasting an earnings decline of more than 21% this year, before further decelerating at an average annual rate of about 7%, growth investors may opt for alternatives in the market.
Therefore, although the stock looks significantly undervalued, it may not be time to buy given its expected earnings decline.
Technically, Biogen shares seem to have recently plummeted to trade closer to the oversold conditions of the 14-day RSI. However, the stock also appears to have found solid trendline support, putting it in a position for a rebound.
Therefore, given Wednesday’s exciting earnings report, the stock could make a short-term rebound within the descending channel, thus creating profit targets at about $285.11 and $305.59.
However, if the earnings report fails to trigger a rebound, the extended declines could find support at $255.93, or lower at $238.71.
BIIB could be a good short-term buy
In summary, although Biogen issued a better-than-expected earnings forecast, the current downward trend seems poised to continue amid a lack of solid growth catalysts.
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