Barclays Prefers Biogen Over Celgene Heading Into Q4 Results

• Biogen Inc BIIB shares have lost 12 percent since December 22, while shares of Celgene Corporation CELG are down 5 percent.
• Barclays’ Geoff Meacham maintained an Overweight rating for Biogen, with a price target of $420, while reiterating an Equal-weight rating for Celgene.
• Although both the companies are expected to perform well in FY16, investors may seek greater clarity on Biogen’s overall growth profile and the progress of Celgene’s overall pipeline, Meacham stated.

Biogen

Analyst Geoff Meacham mentioned that while Biogen is expected to report POC data from several high impact studies in 1H16, investors should first evaluate the health of the company’s MS franchise and the overall growth profile.

The analyst expects the company to report in-line or better-than-expected revenue growth and non-GAAP EPS for FY16. Consensus expectations of the company recording WW Tecfidera growth of over 10 percent in 2016 look achievable, given the 4-5 percent and more increases expected across the MS portfolio.

Biogen’s 4Q15 performance is likely to be reassuring against a weak 2Q15 performance. “Overall, while we acknowledge a lower growth profile in the core MS business, we think that the risk/reward profile in BIIB shares is attractive given several de-risking events in Alzheimer's, MS and SMA this year,” Meacham wrote.

The EPS estimates for FY16 and FY17 have been reduced from $18.20 to $18.00 and from $19.90 to $19.87, respectively, to reflect opex and share repo assumptions.

Celgene

In a separate report, Meacham mentioned that Celgene’s preannouncement of 4Q sales for key products and non-GAAP EPS is likely to put investor focus on the adoption of Revlimid in NDMM in Europe and incremental information about Abraxane/Pomalyst/Otezla commercial trends and the progress in its overall pipeline.

Investors are likely to seek more clarity on R&D SG&A trends after the first full quarter following the Receptor acquisition.

Meacham believes that Celgene’s 2016 guidance is conservative with the company likely to beat estimates across major metrics. The EPS estimates for 2015, 2016 and 2017 have been reduced from $4.76 to $4.71, from $5.80 to $5.70 and from $7.35 to $7.25, respectively.