What Happened?
Shares of biotech company Biogen (NASDAQ: BIIB) fell 3.1% in the morning session after analysts at Truist downgraded the stock, citing concerns over the company's growth prospects and high-risk pipeline. The brokerage lowered its rating on the drugmaker to "hold" from "buy" and significantly cut its price target to $142 from $199. Truist expressed a lack of optimism regarding Biogen's Alzheimer's drug opportunity, forecasting only modest growth for Leqembi. The downgrade also pointed to weak growth prospects for the company's existing products and noted that its late-stage pipeline is viewed as high-risk. Analysts at the firm believe sales for other key drugs, Zurzuvae and Skyclarys, have limited growth potential or have already peaked. The negative sentiment from the analyst action appeared to overshadow other company news, as Biogen separately announced a $2 billion investment to expand its manufacturing footprint in North Carolina.
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What Is The Market Telling Us
Biogen’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock dropped 3% as several negative developments weighed on the sector. Weakness in managed care providers was a significant factor, with companies like Elevance Health and Humana seeing declines due to an analyst downgrade and a lost lawsuit regarding Medicare bonus payments, respectively. Additionally, some pharmaceutical and biotech companies experienced sharp drops following unfavorable news; for instance, Sarepta Therapeutics plunged after a report indicated another patient death tied to its experimental gene therapy, and GSK's blood cancer drug dosage was voted against by the FDA advisory committee. Broader market sentiment, including concerns about rising costs and inadequate pricing for 2025 plans among health insurers, also contributed to the downward pressure on healthcare equities.
Biogen is down 18.1% since the beginning of the year, and at $122.91 per share, it is trading 46% below its 52-week high of $227.44 from July 2024. Investors who bought $1,000 worth of Biogen’s shares 5 years ago would now be looking at an investment worth $438.67.
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