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Category: Stock Market and Biogen
Date: 14 October 2019 Stock Price: $223.31 We take a look at the 2nd quarter earnings report of their 2019 fiscal year of Biogen, a biotechnology company focusing on delivering therapies for people living with neurological and neurodegenerative diseases.
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About Biogen
At Biogen, our mission is clear: we are pioneers in neuroscience. Biogen discovers, develops, and delivers worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases as well as related therapeutic adjacencies. One of the world’s first global biotechnology companies, Biogen was founded in 1978 by Charles Weissmann, Heinz Schaller, Kenneth Murray, and Nobel Prize winners Walter Gilbert and Phillip Sharp, and today has the leading portfolio of medicines to treat multiple sclerosis, has introduced the first approved treatment for spinal muscular atrophy, commercializes biosimilars of advanced biologics, and is focused on advancing research programs in multiple sclerosis and neuroimmunology, neuromuscular disorders, movement disorders, Alzheimer’s disease and dementia, ophthalmology, immunology, neurocognitive disorders, acute neurology, and pain.
Overview of Biogen's latest earnings report
Data below refers to quarterly data unless specified otherwise:
- Revenue: $3.616 billion (up from $3.356 billion for the same period of the previous year)
- Revenues increased by 7.7% over the last 12 months
- Expenses: $1.660 billion (down from $2.143 billion for the same period of the previous year)
- Expenses decreased by -22.5% over the last 12 months
- Net earnings: $1.494 billion (up from $866.6 million for the same period of the previous year)
- Diluted earnings per share: $7.85 (up from $4,18 for the same period of the previous year)
- PE ratio: 7.1
- Diluted weighted-average shares outstanding: 190.4 million (down from 207.3 million for the same period of the previous year)
- Cash and cash equivalents: $2.952 billion
- Cash and cash equivalents per share: $15.50
- Cash and cash equivalents makes up 6.9% of Biogen's market capital
- Cash and cash equivalents makes up 11.22% of Biogen's total assets
- Accounts receivable: $1.959 billion
- Accounts receivable makes up 7.45% of Biogen's total assets
- Stockholders equity in Biogen: $12.948 billion
- Stockholders equity per share: $68
- So Biogen is trading a 3.27 times its stockholders equity which is well within the expected range of between 2 and 4 which most firms ten to trade at.
Biogen's management commentary on the results
Cambridge, Mass., July 23, 2019 -- Biogen Inc. (Nasdaq: BIIB) today reported second quarter 2019 financial results.
“Biogen delivered solid performance globally in the second quarter, and we believe we are on track for a strong year,” said Michel Vounatsos, Biogen’s Chief Executive Officer. “We added four new programs to our pipeline this quarter, as we continued to diversify and build depth within neuroscience and pursue therapeutic adjacencies. Specifically, the acquisition of Nightstar Therapeutics has provided us with two potentially first-in-class mid- to late-stage gene therapy programs in specialty ophthalmology, and we initiated two new studies in our priority areas of multiple sclerosis and amyotrophic lateral sclerosis. We continued to allocate capital, and we remain focused on investing in the areas we believe have the highest potential return for shareholders.”
2019 Financial Guidance Biogen is raising its full year 2019 financial guidance. This financial guidance consists of the following components:
“Biogen delivered solid performance globally in the second quarter, and we believe we are on track for a strong year,” said Michel Vounatsos, Biogen’s Chief Executive Officer. “We added four new programs to our pipeline this quarter, as we continued to diversify and build depth within neuroscience and pursue therapeutic adjacencies. Specifically, the acquisition of Nightstar Therapeutics has provided us with two potentially first-in-class mid- to late-stage gene therapy programs in specialty ophthalmology, and we initiated two new studies in our priority areas of multiple sclerosis and amyotrophic lateral sclerosis. We continued to allocate capital, and we remain focused on investing in the areas we believe have the highest potential return for shareholders.”
2019 Financial Guidance Biogen is raising its full year 2019 financial guidance. This financial guidance consists of the following components:
- Revenue is expected to be approximately $14.0 billion to $14.2 billion, an increase from the prior guidance range of approximately $13.6 billion to $13.8 billion.
- GAAP and Non-GAAP R&D expense is expected to be approximately 15.5% to 16.5% of total revenue, compared to the prior guidance range of approximately 16% to 17%.
- GAAP SG&A expense is expected to be approximately 16% to 17% of total revenue, unchanged versus the prior guidance range.
- Non-GAAP SG&A expense is expected to be approximately 15.5% to 16.5% of total revenue, compared to the prior guidance range of approximately 16% to 17%.
- GAAP tax rate is expected to be approximately 17% to 18%, compared to the prior guidance range of approximately 18.5% to 19.5%.
- Non-GAAP tax rate is expected to be approximately 15.5% to 16.5%, compared to the prior guidance range of approximately 18% to 19%.
- GAAP diluted EPS is expected to be between $29.60 and $30.40, an increase from the prior guidance range of $26.65 and $27.65.
- Non-GAAP diluted EPS is expected to be between $31.50 and $32.30, an increase from the prior guidance range of $28.00 to $29.00.
Biogen (NASDAQ: BIIB) stock price history
The image below, obtained from Google, shows the stock price history of Biogen over the last 5 years. And it's not been a very good time for Biogen stockholders. 5 years ago the stock was trading at around $282 a stock and its currently trading at $223.31 a stock. That's a loss of -20.8% suffered by Biogen stockholders over the last 5 years.
The stock of Biogen is trading at a lot closer to its 52 week low of $215.78 than it is to its 52 week high of $344, which to us is an indication that the short term sentiment and momentum of Biogen's stock is very negative right now.
The stock of Biogen is trading at a lot closer to its 52 week low of $215.78 than it is to its 52 week high of $344, which to us is an indication that the short term sentiment and momentum of Biogen's stock is very negative right now.
Biogen (NASDAQ: BIIB) latest stock valuation
So what is Biogen's stock worth based on the release of their latest earnings report and their fiscal guidance provided? Based on Biogen's latest earnings report and the fiscal guidance provided for their full 2019 fiscal year our valuation models provide a target (full value) price for Biogen's stock at $336.70 a stock. We therefore believe that the stock of Biogen is undervalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $336.70. Therefore we believe a good entry point into Biogen's stock is at $303 or below. Since the stock of Biogen is trading at well below our recommended entry price we rate Biogen's stock as a buy
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $336.70. Therefore we believe a good entry point into Biogen's stock is at $303 or below. Since the stock of Biogen is trading at well below our recommended entry price we rate Biogen's stock as a buy
Next earnings release date for Biogen
It is expected that Biogen's 3rd quarter 2019 earnings report will be released on 22 October 2019