Healthcare analyst Eric Schmidt of Cowen & Co. reiterated an Outperform rating on Biogen Inc (NASDAQ:BIIB) today with a $368 price target, marking a 20% upside from where shares last closed. The rating comes after the company’s alleged plans to raise prices for its MS therapies. Schmidt has a 54% success rate recommending stocks with a +27.8% average return per rating.
The analyst explains, “Third party sources indicate Biogen enacted a 4% price hike on Tecfidera, Avonex, and Plegridy and a 5% price hike on Tysabri.” These price increases come after a 6% hike for Tecfidera’s price tag in August and 5.5$ increase in March. Now, the drug is about $73.2K per year. Avonex and Plegridy are about the same price as this, while Tysabri is approximately $71.8K per year. The analyst believes that although Tecfidera has the potential to become the “leading therapy for multiple sclerosis,” its “growth prospects have been tarnished by and association with PML and other issues.”
Schmidt continues, “While the magnitude of MS drug price increases may be lower than normal during an election year, we continue to view U.S. pricing in the MS marketplace as flexible, and the main driver of growth for BIIB’s franchise.” Although Biogen has indicated that price increases will be decelerated during the election year, the company has not established the frequency of its price increases for 2016.
Schmidt concludes, “We view Biogen as the dominant player in the MS market, and capable of setting the pace for future price increases. Our Tecfidera, Avonex, and Tysabri revenue models forecast net U.S. price increases in the 3-5% per year range, and appear conservative.” Overall, he believes that those who invest in Biogen “will be rewarded for their patience.”
According to the 7 analysts polled by TipRanks in the last 3 months, 5 are bullish on Biogen while 2 remain neutral. The average 12-month price between these 7 analysts is $375, marking a 22% potential upside from where shares last closed.
