Can Biogen Cure Any Portfolio’s Disease?
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Biogen Idec Incorporated (NASDAQ: BIIB) is a global biotechnology company operating to discover, develop, manufacture, and market therapies for the treatment of neurodegenerative diseases. Biogen’s main product lines include: Rituxan, Fumaderm, Fampyra, Tysabri, and Avonex. As of last count, Biogen is a prominent player in the biotechnology industry, being worth $34 billion. Year to date, Biogen has rallied an astonishing 32.22%, vastly outperforming all the major indexes. Most recently, Biogen’s second quarter results smashed analyst estimates, earning $0.26 more in earnings per share and $0.1 billion more in revenues than the average consensus projected. So can this Boston-based biotechnology company cure any portfolio’s disease?
Healthy Fundamentals
In 2009, Biogen reported earnings per share of $3.35. In 2014, the average analyst consensus believes Biogen will derive $8.41 from its business operations. That represents a 151.04% increase in earnings per share over just 5 short years. Based on these statistics, Biogen’s compound annual growth rate (CAGR) is 20.21%, a bewildering feat for a company of Biogen’s size. Biogen’s growth is extremely consistent, as Biogen pulls more in earnings per share each and every year during this time period. Biogen’s growth is tremendously dependable and will undeniably act as a catalyst for the stock in the coming years. At the current moment, Biogen does not pay out dividends and has not expressed any plans of doing so in the future. Instead of paying out dividends to its investor, Biogen reinvests its profits back into research and development, driving future growth.
The chart below displays Biogen’s sales, operating profit, net income, net margin, operating margin, and earnings per share over the coming years.
Pipeline Full of Game-Changing Products
Biogen is a biotechnology company, so they heavily rely on new products to be developed to fuel future growth. Biogen has 9 products that are approved, meaning they can legally market them for the treatment of a certain disease. In its pipeline, Biogen holds 19 products, ranging from being in the first phase to being filed for approval. Getting products to be approved can be a long and strenuous process, but even if not half of the products get approved that are currently sitting in Biogen’s pipeline; they will still at least double their product count. One product, BG-12, utilized to treat multiple sclerosis, is currently filed for approval. Fueled by strong late stage trial data, many believe an approval for this treatment may occur in the coming months. The market for multiple sclerosis is rather large, and growing. Based on medical projections, 250,000 to 350,000 in the United States have been diagnosed with MS, with approximately 200 new cases diagnosed each week. All in all, Biogen possesses numerous potential game-changing products that will fuel further growth in the future. The chart below displays the stage in which each product is in, as well as what illness the product is utilized to treat.
Who is the King of Biotech?
Compared to some of Biogen’s most prominent competitors, such as: Amgen Incorporated (NASDAQ: AMGN), Pfizer Incorporated (NYSE: PFE), Bristol Myers Squibb Company (NYSE: BMY), and Abbott Laboratories (NYSE: ABT), Biogen relates reasonably favorably.
|
2009-2014 EPS Growth |
Current Dividend Yield |
2009-2014 Dividend Growth |
|
|
BIIB |
151.04% |
0.00% |
0.00% |
|
AMGN |
60.31% |
1.74% |
292.86% |
|
PFE |
0.00% |
3.68% |
21.25% |
|
BMY |
31.90% |
4.29% |
15.20% |
|
ABT |
54.20% |
3.09% |
47.50% |
|
Price/Earnings Ratio |
Price/Earnings/Growth Ratio |
Net Profit Margin |
|
|
BIIB |
26.38 |
1.37 |
24.27% |
|
AMGN |
17.70 |
1.02 |
23.47% |
|
PFE |
20.79 |
3.83 |
12.90% |
|
BMY |
15.22 |
3.28 |
17.42% |
|
ABT |
21.41 |
1.45 |
12.17% |
In terms of growth, Biogen squashes the industry, while Pfizer flat-lines. All companies in this industry pay out dividends, except for Biogen, with Bristol Myers Squibb possessing the largest dividend, and Amgen possessing the fastest growing dividend. In the fundament ratio comparison, Biogen appears a little pricy, while Bristol Myers Squibb trades at a discount. When growth is taken into account, Amgen is ideally priced, while Pfizer appears expensive. In the net profit margin comparison, Biogen stands out to the upside, while Pfizer stands out to the downside.
The Foolish Bottom Line
Biogen has already rallied extensively in the past years, and may have become a little overpriced as investors have chased the stock higher and higher. Despite the premium Biogen is now trading at, Biogen is still a global leader in developing and manufacturing effective treatments for widespread diseases and illnesses, and currently has more products in its pipeline than it currently has approved. The foolish bottom line is that Biogen is a global biotechnology trailblazer, with strong fundamentals and a pipeline packed to the brim with potential “blockbuster” products, and can cure any portfolio’s disease.
makinmoney2424 has no positions in the stocks mentioned above. The Motley Fool owns shares of Abbott Laboratories. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
