Biogen Stock Is Mutating Into a Value Play

Key Points

• Biogen is a leading biotechnology company with one of the only FDA-approved Alzheimer's disease treatments that target amyloid removal.
• Biogen stock recently made 13-year lows as shares have fallen more than 70% off their highs.
• For the first time in four years, Biogen's revenues grew, driven by its four new launch drugs offsetting the sales erosion in its multiple sclerosis (MS) franchises.

Biogen Inc. NASDAQ: BIIB has steadily declined since peaking at $468.55 in 2021, as shares are trading down 70.64% from those highs to 12-year lows at $137.33. The medical sector biotechnology company is trading at historically low valuations at a 12.41 price-earnings (P/E) ratio, which is less than half of the industry average P/E of 29.52. Its price-book (P/B) ratio is 1.2, significantly cheaper than the industry average P/B of 5.81.

While it’s not Eli Lilly & Co. NYSE: LLY or Regeneron Pharmaceuticals Inc. NASDAQ: REGN when it comes to growth, the company is still growing and generating profits. Value investors should take a closer look at this former high-flying blue-chip biotech stock.

Biogen Has a Solid Portfolio of Franchise Drugs

The biotech company's portfolio of treatments includes many best-selling drugs. Its rare drugs segment is its growth driver, having generated $535 million in 2024, up 15% YoY. Spinraza is a gene therapy used for treating a rare spinal muscular atrophy. Leqembi is the controversial FDA-approved treatment for early-stage Alzheimer's disease, specifically for patients with mild dementia or mild cognitive impairment.

The drug targets the removal of amyloids, which are plaque buildup in the brain and a key hallmark of the disease. Biogen also has a biosimilars segment producing generic drugs with a 4% YoY revenue growth of $202 million in 2024. Tecfidera and Vumerity are treatments for multiple sclerosis (MS). Its MS segment is the largest but also has been losing momentum as 2024 revenues slipped 9% YoY to $1.07 billion.

Steady Growth in Q4 But Downside Guidance Triggered a Capitulation

In Q4 2024, Biogen reported $3.44 per share earnings, which beat consensus analyst estimates by 9 cents. Revenues grew 3% YoY to $2.46 billion, also beating consensus estimates of $2.41 billion. The company generated free cash flow of $722 million in Q4 and $2.7 billion for the year.

Biogen issued downside guidance for 2025 with an EPS forecast between $15.25 to $16.25 versus $16.33. Full-year 2025 revenue is expected to decline by mid-single-digit percentage YoY. The operating margin is expected to remain flat. The company has elected to discontinue further development of early Alzheimer’s disease drug BIIB113, early Parkinson’s disease drug BIIB101, and diabetic peripheral neuropathic pain medicine cemdomespib.

Conference Call Highlights: Drive Growth With Its Four Core New Drugs

CEO Chris Viehbacher reaffirmed Biogen’s priority of driving growth in its four recently launched drugs: Leqembi for early-stage Alzheimer’s disease, Qalsody for benign prostate cancer, Skylarys for Friedrich’s ataxia and Zurzuvae for adults with postpartum depression.

These drugs will help to offset declines in its MS franchise. The company is also focused on advancing its rare disease and immunology pipeline in 2025, which includes Phase 3 trials for Felzartamab, a treatment for multiple myeloma and kidney diseases.

Viehbacher commented, “So, you know, the race really that we are faced with is seeing the erosion of our multiple sclerosis product revenue. But I'm particularly happy to see in 2024 that the revenue from our launch products really offset the more than offsets the decline in our multiple sclerosis product revenue… It meant that really our core pharma business actually grew. And that's for the first time in four years.” 

BIIB Stock Attempts a Bullish 3-Drives Pattern

A bullish three-drives pattern consists of three lower lows connected by a neckline that operates as a breakout trigger if the stock can successfully bounce through and stay above there. It's also comprised of five legs, which is one extra leg from an ABCD reversal pattern.

BIIB commenced the three-drive pattern at the $165.29 swing high, falling to the lowest swing low at $128.51 before attempting an MSL trigger at $139.10. The daily anchored VWAP support is $135.63, and the daily RSI is flat at the 39-band. The neckline breakout occurs above $142.63. Fibonacci (Fib) pullback support levels are at $132.04, $125.00, $115.03, and $105.49.

BIIB stock’s average consensus price target is 54.35% higher at $211.96, and its highest analyst price target sits at $342.00. It has 13 analysts' Buy ratings and 17 Hold ratings. The stock has a 2.59% short interest.

Bullish investors can consider using cash-secured puts at the Fib pullback support levels to buy the dip. If assigned the shares, then writing covered calls at upside Fib levels executes a wheel strategy for income.