On Friday, BMO Capital Markets revised its stance on Biogen (NASDAQ:BIIB), downgrading the stock from its previous "Outperform" rating to "Market Perform." Accompanying this change, the firm also reduced its price target on the shares from $230.00 to $164.00.
The stock, currently trading near its 52-week low of $145.24, appears undervalued according to InvestingPro analysis, which identifies strong fundamentals including a P/E ratio of 13.26 and robust free cash flow yield.
The downgrade comes amidst expectations of a slower revenue growth for Biogen's Alzheimer's treatment, Leqembi, and additional challenges faced by the company. According to BMO Capital, the revenue erosion in Biogen's multiple sclerosis (MS) segment, coupled with weaker-than-anticipated growth in its Rare Disease portfolio, are contributing factors to the revised outlook.
This is reflected in the company's recent revenue decline of 3.86% over the last twelve months. The firm also cited limited opportunities for high-value catalysts in the near term as a reason for the downgrade.
In a statement, BMO Capital expressed the belief that while Biogen is actively working to redirect its course, the fruition of these efforts will likely take time. The firm noted, "Work is underway at Biogen, but we believe efforts to change the course of the company will take time to materialize."
Despite these challenges, InvestingPro data shows the company maintains a GOOD overall financial health score, with multiple additional insights available through their comprehensive Pro Research Report.
The analyst from BMO Capital emphasized the long-term potential for management to address the company's current challenges. However, the firm sees "little upside in the near future while they are being resolved," indicating a cautious stance on the stock's short-term performance.
The revised price target of $164.00 reflects BMO Capital's adjusted expectations for Biogen's financial performance and growth prospects. The downgrade and new price target suggest a more conservative outlook for the biotechnology company as it navigates through a period of transition and attempts to overcome the hurdles highlighted by the analyst.
In other recent news, Biogen Inc (NASDAQ:BIIB). faced a series of analyst adjustments. Jefferies downgraded Biogen from Buy to Hold, citing concerns over the Alzheimer's treatment, Leqembi, and a potential decline in Ocrevus royalties by 2030.
On the other hand, Baird increased its price target for Biogen to $300, following a positive reexamination recommendation for lecanemab, a treatment for early Alzheimer's disease, by the European Medicines Agency's Committee for Medicinal Products for Human Use (CHMP).
Citi initiated coverage on Biogen with a neutral rating and a $190 price target, reflecting a cautious stance on the company's financial outlook. TD Cowen, however, maintained a Buy rating but lowered the price target to $275, projecting a return to growth for Biogen driven by Leqembi and another drug, Skyclarys.
These recent developments indicate the varying perspectives on Biogen's financial future and the potential impact of its Alzheimer's treatments. It's crucial to note that these are recent events and investors should keep a close eye on the company's progress.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.