Why This Analyst Sees Roughly 20% Upside In This Large-Cap Biopharma

Biogen Inc BIIB shares are now trading notably off their all-time high of $468.55 hit on June 7, achieved on the back of Aduhelm approval.

An analyst at RBC Capital Markets has now turned bullish on the stock after remaining on the sidelines for too long.

The Biogen Analyst: Brian Abrahams upgraded Biogen shares from Sector Perform to Outperform and increased the price target from $227 to $248, suggesting about 20% upside from current levels.

The Biogen Thesis: Biogen may have only 11% downside from the current depressed levels, even if Alzheimer's pipeline was removed from RBC's model and with conservative estimates for marketed/developed programs, analyst Abrahams said.

RBC's recent doctor survey suggests that despite the negative publicity received by beta-amyloid antibodies, Alzheimer's physicians are still willing to prescribe them, the analyst noted. This supports multi-billion-dollar sales, he added.

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If there is any near-term National Coverage Determination loosening and/or if the lecanemab Phase 3 reads out positively in the third quarter, doctors would be open to using Biogen's antibodies, the analyst said.

Abrahams added that this will support $8 billion in potential peak end-user Alzheimer's disease sales and valuation upside to $313.

The analyst did acknowledge that uncertainties remain about future beta-amyloid competitive dynamics and duration of use.

"At current levels, <$210, shares appear to be baking in less and less for Alzheimer's, which should also limit downside risk on additional near-term developments and improve the overall setup," RBC said.

BIBB Price Action: At last check, Biogen shares were up 1.66% to $211.23 at market close.

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