RBC maintains Biogen Outperform stock rating, awaits Leqembi sales acceleration By Investing.com

On Wednesday, RBC Capital expressed continued confidence in Biogen (NASDAQ:), maintaining an Outperform rating and a $317.00 price target for the company’s stock. The firm’s analyst highlighted the growing use of Biogen’s Alzheimer’s drug, Leqembi, noting that while the uptake of the drug is increasing, it has not yet reached a pivotal point of rapid growth. The analyst anticipates that the market is awaiting catalysts that could accelerate near-term uptake.

The commentary comes ahead of expected briefing documents for Eli Lilly (NYSE:)’s competing Alzheimer’s drug, donanemab, set to be released on Thursday, June 6, 2024, with an Advisory Committee meeting to follow on Monday, June 10, 2024. RBC Capital has analyzed the potential outcomes of the upcoming events and their implications for Biogen.

According to the firm, the most favorable outcome for Biogen would be the approval of donanemab with a less advantageous label, potentially giving Leqembi perceived benefits while also motivating Eli Lilly to contribute to the growth of the Alzheimer’s treatment market. Conversely, a negative outcome for donanemab could increase pressure on Biogen and its partner Eisai to independently cultivate the market, which might slow down the launch of their drug within the year.

Furthermore, if donanemab were to receive approval with no significant restrictions, Biogen might initially face a disadvantage due to donanemab’s greater convenience. However, the analyst believes this could be mitigated next year with the likely introduction of a subcutaneous form of Leqembi.

RBC Capital projects that, under most scenarios, Biogen could achieve peak worldwide sales exceeding $9 billion. The firm reaffirms its recommendation for investors to buy Biogen shares, indicating optimism about the company’s prospects regardless of the competitive landscape.

InvestingPro Insights

Reflecting on the current market dynamics and RBC Capital’s optimistic outlook for Biogen (NASDAQ:BIIB), the latest data from InvestingPro provides additional context for investors considering the biotech firm’s shares. With a market capitalization of $34.09 billion, Biogen presents as a significant player in the industry, backed by a solid financial foundation. The company’s P/E ratio stands at a notable 28.88, with an adjusted P/E ratio over the last twelve months as of Q1 2023 dropping to 20.48, suggesting a more attractive valuation relative to earnings.

InvestingPro Tips highlight that Biogen’s stock has seen a significant return over the last week, with a 9.2% total price return, reflecting a positive short-term investor sentiment. Additionally, the company’s liquid assets surpass short-term obligations, providing financial stability and resilience. Moreover, analysts predict Biogen will be profitable this year, reinforcing RBC Capital’s confidence in the company’s potential, especially as it navigates the competitive landscape of Alzheimer’s treatments.

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