One prominent Wall Street analyst has gone on to issue his research on the Biotech sector alongside his own recommendations.
Limited to the major biopharma companies and weeding out the smaller, more volatile companies, many were surprised by which companies this analyst picked as the best and worst in the industry going forward.
Credit Suisse analyst Evan Seigerman picked Vertex Pharmaceuticals (NASDAQ: VRTX) as the best stock in the industry.
Initiating coverage of the company today, he issued an “outperform” rating as he thinks the company has the best revenue projections in the future. So far, the company is up 8.2 percent over the past year, trading around $169.12 while Seigerman expects the company could surge to $209 in the near future.
On the other hand, Biogen Inc (NASDASQ: BIIB) was his worst pick in the sector. Biogen has fallen throughout the year and the Credit Suisse analyst warns that it’s “declining base business” makes it undoubtedly the worst major biotech stock in the market right now.
Biogen also made news yesterday when it received an unsolicited offer by TRC Capital to buy up over half a million shares of the company at a discount. While management recommends that company shareholders not respond to the offer, it’s clear that the company is in a position of weakness if others are offering to buy out the stock for prices lower than what it traded at earlier this month.
“We rate Biogen shares as Underperform due to our view that the company’s core base businesses could decline near-term. We also think the current pipeline remains weak, following the late-stage failure of aducanumab in Alzheimer’s disease,” said Seigerman. As for his best pick, Vertex, he goes on to say that “Among large cap names, we think that Vertex has the best revenue and earnings growth profile.” He added that, while the shares look expensive in the near future, in the long-term they are quite cheap. The analyst also praised the cash-flow potential offered by the company’s cystic fibrosis drugs which were in a solid position in the early stage of the product pipeline.
Shares of Vertex pharmaceuticals increased a mild 2 percent, while Biogen’s stock price remained roughly the same.
Although analyst ratings can make a big dip in stock prices for most companies, biotech firms tend to be more volatile when it comes to actual news developments as opposed to analyst opinions.
Vertex Pharmaceutical Company Profile
Vertex Pharmaceuticals discovers and develops small-molecule drugs for the treatment of serious diseases. Its key drugs are Kalydeco, Orkambi, and Symdeko for cystic fibrosis, in addition to several pipeline candidates targeting this market. Vertex’s pipeline also includes therapies for cancer, pain, inflammatory diseases, influenza, and other rare diseases. – Warrior Trading News
Biogen Company Profile
Biogen and Idec merged in 2003, combining forces to market Biogen’s multiple sclerosis drug Avonex and Idec’s cancer drug Rituxan.
Today, Rituxan and next-generation antibody Gazyva are marketed via a collaboration with Roche. Biogen also markets novel MS drugs Tysabri and Tecfidera. In Japan, Biogen’s MS portfolio is co-promoted by Eisai.
Hemophilia therapies Eloctate and Alprolix (partnered with SOBI) were spun off as part of Bioverativ in 2017. Biogen has several drug candidates in phase 3 trials in neurology and neurodegenerative diseases and has launched Spinraza with partner Ionis. – Warrior Trading News