Why Biogen Shares Are Tumbling After Earnings Report

Health and Healthcare

Published: July 24, 2015 8:25 am

Last Updated: April 28, 2020 10:14 am

Biogen Inc. (NASDAQ: BIIB) reported second-quarter 2015 results before markets opened Friday. The biotech firm posted adjusted diluted earnings per share (EPS) of $4.22 on revenues of $2.59 billion. In the same period a year ago, the company reported EPS of $3.49 on revenues of $2.42 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $4.10 and $2.71 billion in revenues.

On a GAAP basis, the company reported second-quarter EPS of $3.93, which included a gain of $86.8 million for amortization of acquired assets and a $17.1 million tax-related charge.

After commenting on Biogen’s multiple sclerosis and hemophilia treatments, the company’s CEO focused on the company’s trials of an Alzheimer’s disease treatment:

The Company also continues to invest in the science that is core to our future, and we are continuing to advance our pipeline in areas where patients have limited or no treatment options. We are excited to report we are now actively recruiting for two global Phase 3 studies of aducanumab in patients with early Alzheimer’s disease. We see aducanumab as a potentially transformational opportunity for Biogen, and for patients with this devastating disease.

Biogen also updated its full-year financial guidance. Revenue growth is now expected to be in the range of 6% to 8% above 2014 revenues of $9.7 billion. The company’s previous guidance called for revenue growth of 14% to 16% above last year’s revenues. Adjusted EPS guidance also was lowered from a prior range of $16.60 to $17.00 to a new range of $15.50 to $15.95.

The cuts to revenue and earnings guidance will absolutely hammer the share price in Friday trading. Sales of its multiple sclerosis drugs missed analysts’ revenue expectations, and the cuts to guidance indicate that Biogen expects those sales to remain lower than previous estimates.

Biogen shares traded down nearly 12% in premarket trading, at $340.00 in a 52-week range of $290.85 to $480.18. Thomson Reuters had a consensus analyst price target of $471.75 before the report.

ALSO READ: The Worst Companies to Work For

It’s Your Money, Your Future—Own It (sponsor)

Are you ahead, or behind on retirement? For families with more than $500,000 saved for retirement, finding a financial advisor who puts your interest first can be the difference, and today it’s easier than ever. SmartAsset’s free tool matches you with up to three fiduciary financial advisors who serve your area in minutes. Each advisor has been carefully vetted and must act in your best interests. Start your search now.

If you’ve saved and built a substantial nest egg for you and your family, don’t delay; get started right here and help your retirement dreams become a retirement reality.