Analyst Note| Karen Andersen, CFA |
We're maintaining our $391 per share fair value estimate for Biogen following third-quarter results reflecting several expected headwinds, including generic/biosimilar pressure on MS drug Tecfidera/oncology drug Rituxan, lower sales for SMA therapy Spinraza, and a disappointing launch for new Alzheimer's drug Aduhelm. However, management raised top- and bottom-line guidance for the full year and is heavily spending its cash flows on distributions to shareholders, in the form of share repurchases. We think shares still look undervalued, and that Biogen's progress with its neurology pipeline will continue to secure a wide moat. We expect the firm to return to double-digit growth by 2023, as the launch of Aduhelm (and potentially the launch of phase 3 amyloid antibody lecanemab) and other neurology pipeline candidates drive sales, and as generic and biosimilar headwinds abate.