Although Biogen Inc (NASDAQ:BIIB) will face generic competitors for Tecfidera in the near term, the pricing in of aducanumab success may drive the stock to the mid-$300s, according to Morgan Stanley.
The Biogen Analyst: Matthew Harrison upgraded Biogen from Underweight to Overweight and raised the price target from $263 to $357.
The Biogen Thesis: "Stocks sometime run counter to expectations, as negative changes in business fundamentals can clear the way for significant upside catalysts," Harrison said in a Monday upgrade note. (See his track record here.)
Biogen has downside risk in the near-term due to generic launches for its multiple sclerosis drug Tecfidera, which contributes around 30% of the company’s total product sales, the analyst said.
Yet investors are likely to look past Tecfidera soon and focus on a higher probability of success for Biogen's investigational drug aducanumab, which is “the first potential disease modifying therapy for Alzheimer's disease,” he said.
Biogen's stock reflects less than a 25% probability of success, but the market may soon price in at least 50% odds of success as the potential FDA approval date in March 2021 approaches, Harrison said.
Morgan Stanley views Biogen as a “high-risk/high-reward” stock and believes that “now is the right time to take the risk.”
BIIB Price Action: Shares of Biogen were trading 4.29% higher at $284 at last check Monday.