Canaccord Genuity analyst Sumant Kulkarni upgraded Biogen to Buy from Hold, and set a price target of $360, up from $305. The stock closed Friday at $278.14.
Analyst Sumant Kulkarni made a different case for buying Biogen now: FOMO, or fear of missing out.
Will the Food and Drug Administration approve Biogen’s Alzheimer’s treatment, which failed in clinical trials before Biogen decided to submit it anyway?
Analysts at Canaccord Genuity don’t know. But in a note on Sunday, analyst Sumant Kulkarni made a different case for buying Biogen (ticker: BIIB) now: FOMO, or fear of missing out.
Kulkarni wrote that experts’ views are mixed on whether the FDA will approve the drug, called aducanumab. But he wrote that even skeptics seem to think the drug as a “decent shot,” and that that isn’t reflected in the stock’s share price.
“This stock call is based less on an opinion about the merits (or lack thereof) of the science/data,” he wrote. “We cannot, however, underestimate investors’ fear of missing out on the potential to get ahead of what might be an approval for the first ever disease-altering therapy for Alzheimer’s.”
Kulkarni upgraded Biogen to Buy from Hold, and set a price target of $360, up from $305. The stock closed Friday at $278.14.
The back story. Biogen shares are down 6.3% this year, and 15.8% over the past 12 months. The company’s story has been defined over the past year by the roller-coaster ride over aducanumab, the failure of which sent the stock crashing last March, and the resurrection of which sent it soaring in September. The company’s board authorized a $5 billion stock buyback in December.
What’s new. In his note, Kulkarni noted that significant risks exist for Biogen outside of its aducanumab play, including the forthcoming ruling on Mylan’s (MYL) challenge to Biogen’s patent on Tecfidera, its blockbuster multiple-sclerosis drug. And he highlighted potential competition to Biogen’s spinal-muscular-atrophy drug Spinraza from Zolgensma, the gene therapy by Novartis (NVS).
But he said that the opportunity around aducanumab was too good to pass up. He said he models a 50% chance that the FDA approves the treatment. “Our upgrade is based primarily on our view that BIIB stock currently does not reflect the potential for upside as we head into the regulatory review period for aducanumab,” he wrote.
Looking ahead. Shares of Biogen were up 0.5% to $279.53 Monday morning, while the Dow Jones Industrial Average was down 1.4%. The company is set to report earnings on Thursday, and aducanumab will likely be a hot topic on the earnings call, scheduled for 8 a.m. Eastern time.
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