On Mar 8, Zacks Investment Research upgraded Biogen Idec Inc. (BIIB) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Biogen has been witnessing rising earnings estimates on the back of strong fourth quarter 2013 results. This biotech company’s earnings track record is impressive with the company delivering positive earnings surprises in the last 4 quarters with an average beat of 15.62%. The long-term expected earnings growth rate for this stock is 21.12%.
Biogen reported fourth quarter 2013 results on Jan 29. Earnings per share came in at $2.34, well above the Zacks Consensus Estimate of $2.22 and 67.1% above the year-ago earnings. Biogen expects earnings in the range of $11.00-$11.20 per share in 2014 on revenue growth of 22%-25%.
The company remains in a strong position in the multiple sclerosis (MS) market. While Tecfidera should continue performing well, Tysabri and Avonex should remain strong contributors to the top line. Tecfidera should perform well in the EU also where it gained approval recently.
Meanwhile, Biogen’s decision to gain full control over Tysabri was a smart strategic move. The deal is significantly accretive to earnings, will create operational synergies and represents efficient use of offshore cash. Biogen expects gross margins to improve by 10% by 2018.
Other catalysts could be in the form of FDA approval for candidates like Eloctate, Alprolix (both for hemophilia) and Plegridy (relapsing MS). 2014 should be a catalyst rich year for Biogen with several data readouts expected.
Other Stocks to Consider
Apart from Biogen, Alexion Pharmaceuticals, Inc. (ALXN), Alkermes plc (ALKS) and Shire plc (SHPG) too carry a Zacks Rank #1 (Strong Buy) and are worth considering.
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