In its recent annual Big Debates report, Morgan Stanley named Biogen Idec Inc BIIB 2.39% as its top large-cap biotech stock pick for 2015. Analysts are impressed with Biogen’s robust drug pipeline and feel that very little of the company’s potential is currently priced into the stock.
The Pipeline
Analysts see at least five drugs in Biogen’s pipeline that could contribute to the company’s future valuation. Morgan Stanley sees about $60 per share of value in BIIB037, an anti Aβ-human monoclonal antibody that Biogen is testing as a treatment for Alzheimer’s Disease and acute optic neuritis (AON).
Biogen is also expecting data in 2015 on its drug Tysabri, which is currently being tested for treatment of patients with secondary-progressive multiple sclerosis.
The Projections
At around $347 per share, Biogen stock is up more than 24 percent this year.
Morgan Stanley analyst Matthew Harrison argues for a base case of $395 per share, a more than 15 percent premium to current levels. “We believe consensus’ apparent apathy toward the pipeline creates significant upside risk for Biogen.”
Based on 2015 earnings projections, Biogen is currently priced in-line with rival Amgen Inc, which is growing at a much slower rate. On the other hand, competitor Celgene Corporation, which shares a similar growth rate as Biogen, trades at a much higher projected P/E ratio.
The Future
Moving forward, Morgan Stanley believes…
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