Is it safe to buy Biogen stock after boosting guidance ahead of Street forecasts?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 20, 2021
  • 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.

Source – TradingView

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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