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Biogen Inc (BIIB) Faces Biggest Intraday Drop in 7 Years After Missing Earnings Expectations

The shares of Biogen Inc (NASDAQ:BIIB) were down by 21.52% after missing analysts’ revenue expectations for the quarter and slashing its revenue guidance for the full fiscal year. The biopharmaceutical company reported revenues of $2.59 billion compared to market expectations of $2.73 billion, for the second quarter of 2015. Despite its better-than-expected earnings per share of $4.22 , with Wall Street expectating of $4.10, the shares plummeted. The primary reason for the drop was a lower annual earnings per share guidance update of between $15.50 and $15.95 against its earlier estimate of $16.60 to $17.00. Biogen Inc (NASDAQ:BIIB) reported 7% year-over-year growth in its revenues compared to the prior year quarter along with a 21% increase in its non-GAAP diluted EPS. Another reason behind the bearish market sentiment is the net sales of TECFIDERA missing analysts’ estimates of $909 million with reported sales of $883 million. It is the primary product in Biogen’s portfolio, and is used for the treatment of relapsing multiple sclerosis.

The CEO of Biogen Inc (NASDAQ:BIIB), George A. Scangos, Ph.D., was optimistic about the increasing usage of the drug by patients. He said, “TECFIDERA, which is now the most prescribed oral MS therapy globally, is experiencing moderated patient growth following rapid initial uptake. The launch of PLEGRIDY® is expanding into new markets, and TYSABRI® continues to add new patients requiring higher efficacy.”

Less Competitive Medical Schools in the US

Today’s trading session has wiped out the gains achieved by the shares of Biogen Inc (NASDAQ:BIIB) in 2015, with its shares now down by over 11% year-to-date. Smart money held a bullish outlook of the company during the first quarter, with aggregate investments of $3.41 billion from 64 hedge fund managers against investments of $2.77 billion from 57 hedge fund investors as of December 31. The shares of Biogen Inc (NASDAQ:BIIB) improved by 23.39% in the first quarter, boosting the net investments from hedge fund managers, though they also added to their collective share total.

Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 139% over the last 34 months, which is more than 80 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).

The insiders at Biogen Inc have disposed of their stakes in the company with seeming vigor, with at least 41 insider sales in 2015. Eric Rowinsky, Director at Biogen, sold 23,333 shares of the company in four individual transactions this year, with the largest transaction occurring on March 20 and involving 11,667 shares.

Let’s analyze the key hedgie action regarding Biogen Idec Inc. (NASDAQ:BIIB) to see where the smart money went wrong.

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