Biogen Earnings: Maintaining Our $303 Fair Value Estimate as New Launches Ramp in 2024

We’re maintaining our $303 fair value estimate for Biogen after the firm reported 2023 results that were in line with our expectations and earnings guidance for 2024 that was ahead of our prior forecast, as contract manufacturing declines are poised to improve gross margins more than we had anticipated, and as the firm’s cost savings program develops further, allowing bottom-line growth in 2024. We think the market is likely disappointed by the slow launch of Alzheimer’s drug Leqembi as well as Biogen and Eisai’s decision to invest in a 30% U.S. Leqembi salesforce expansion. Biogen remains in transition as the firm’s portfolio of multiple sclerosis drugs comes under pressure from generic and branded competition, and as newer drugs are just starting to launch, but we think top-line growth will return in 2025. Overall, we continue to see Biogen’s newer products and innovative pipeline supporting a wide moat. Biogen ended 2023 with $5.9 billion in net debt, although with additional deferred payment from Samsung (more than $400 million expected in April), as well as the potential sale of the firm’s remaining biosimilar distribution rights, we think the firm could add more tuck-in acquisitions to help mitigate risk around its core neurology pipeline.