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Biogen ‘underperformance stops here’

June 21, 2017

It was more than three months ago when UBS warned investors to exit Biogen (BIIB), initiating coverage on the drug maker at a Sell and predicting the shares would fall to $260 a share.

Analyst Carter Gould’s prediction came to bear. As of Friday’s close, Biogen’s share price had fallen to just under $252, a more than 14% decline since he set his sell rating on March 8.

But “the underperformance stops here,” says Gould. In a note published today, he upgraded Biogen to a Neutral with a $272 price target, citing an improved risk-reward outlook heading into the drug maker’s second quarter earnings conference call and a waited strategic review, both scheduled for next month.

Why the change of heart? Gould says the competitive threat to Spinraza from gene therapy is baked into Biogen’s share price. Investor sentiment is near a low following the defection of the company’s much respected chief financial officer.

Also, Gould is “incrementally” more constructive on Biogen;’s experimental Alzheimer’s therapy aducanumab.

“On the 2Q call, we expect a strong Spinraza print, balanced by challenging MS dynamics, and details on the company’s Strategic Review,” Gould says. “Though the company has downplayed expectations on this latter focus, we think this represents a logical opportunity to re-set its messaging around a potential interim for aducanumab, as well as to highlight the importance of its proposed dosing changes.”

http://bit.ly/2sOUuGq

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