Where Will Biogen Stock Be In 5 Years?

Biogen Inc. (NASDAQ:BIIB) has been a leading biotechnology firm since its founding in 1978 when it made important progress in treating complex illnesses. It focuses heavily on neurology, neuropsychiatry, specialized immunology, and rare diseases.

Among Biogen’s achievements are developing a range of medicines for multiple sclerosis and creating the first approved treatment for spinal muscular atrophy.

The company has co-developed treatments focusing on key aspects of Alzheimer’s disease. But what does the future hold for Biogen and will it make enough progress in treatments to boost revenue growth and increase shareholder value?

Can Biogen’s Breakthrough Therapies Drive Growth?

Biogen recently finalized the acquisition of Human Immunology Biosciences (HI-Bio) in a move that will strengthen its leading position in therapies for immune-mediated diseases (IMDs). IMDs are conditions for which there is no cure yet.

HI-Bio’s flagship asset, felzartamab, shows potential across various IMDs. Felzartamab is now included in Biogen’s portfolio and ready to enter Phase III trials.

The acquisition, completed with $650 million in milestone payments, aligns with Biogen’s strategic aim to improve its pipeline using advanced biotechnologies.

Biogen marked another big achievement when Leqembi was approved in Israel for treating Alzheimer’s disease (AD). Leqembi is the first medicine that can slow down the loss of memory and thinking skills of people with Alzheimer’s. With current approvals in big markets such as the United States, Japan, and China, Leqembi strengthens Biogen’s position in treating neurodegenerative diseases.

Plus, in June 2024, Biogen received approval from the European Commission for Tofidence. This is a biosimilar -a medicine whose safety and effect are almost identical to those of the reference product (the biologic) – to RoActemra.

Tofidence can treat inflammatory conditions like rheumatoid arthritis and juvenile idiopathic arthritis. Biosimilars are usually more affordable than the biologic. So the approval is very important for Biogen because it may allow it to offer cheaper treatment choices in the European Union.

These new changes support Biogen’s growth. They are also putting the company on the path to achieving a leading role in biopharmaceutical innovations.

Biogen Still Reporting Healthy Financials

In the first fiscal quarter of 2024, which finished on March 31, 2024, Biogen’s total revenue was $2.29 billion. At the same time, total costs and expenses decreased by 9.8% compared to last year’s value of $1.83 billion.

Also, net income and earnings per share increased by 1.4% and 1.1% from last year to $393.40 million and $2.70 each, respectively.

Cash inflow from operating activities was $553.20 million, compared to $455.30 million in the same quarter of the previous year.

As of March 31, 2024, Biogen’s cash and cash equivalents reached $1.07 billion, a rise from the $1.05 billion it had on December 31, 2023.

Where Will Biogen Stock Be In 5 Years?

A 5-year discounted cash flow forecast analysis projects that Biogen will reach $271 per share by 2029.

For the fiscal year ending December 2024, analysts expect Biogen’s growth in earnings per share by 6.1%, reaching $15.61, and revenue aiming to be $9.52 billion. Management has reported better than expected earnings per share in three of the last four quarters.

Looking forward to fiscal year 2025, analysts forecast Biogen’s revenue will grow slightly to $9.54 billion. They also predict EPS will climb by 9.7% from last year to $17.12. 

Biogen’s forward non-GAAP P/E ratio is 14.18x, a good deal below the industry average while its forward EV/EBITDA of 11.44x, forward Price/Sales of 3.29x, and forward Price/Cash Flow of 1.89x sit below the average too.

Is Biogen Stock a Buy?

If analysts are to be believed, Biogen stock has a lot of room to run on the upside now to $272 per share. In spite of their high consensus forecast relative to where the share price sits today, they have largely dimmed on their forecasts with 18 analysts revising their earnings estimates lower for the upcoming quarter.

Nonetheless, Biogen trades without the typically high volatility that is seen in the sector. That may be somewhat attributable to its longevity and predictable financials. It has a $28 billion market capitalization and generates $9.6 billion in revenues with $1.1 billion in net income.

Trading at 3x last twelve month sales means it’s not especially elevated when eyed through that valuation lens. But perhaps the most attractive aspect of the firm is that net income is forecast to grow at a 21.5% rate annually over the next 5 years. That’s in spite of sales forecast to rise at just 2.3% annually.

If management can indeed deliver on the bottom line as forecast, Biogen shareholders may very well be in for a nice ride higher when the market prices in the good news.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.