The majority of U.S. equities have not delivered the much-awaited exceptional performance thus far in 2016, even considering the recent strong rebound. It appears that this is the opportune time to jump into the market if bearing in mind the underlying strength and resilience of the U.S. economy. Both small- and large-scale investors can find numerous investing opportunities at the moment, while the “bargain hunting” campaign seems to be well underway. At the same time, biotech valuations have endured and absorbed a powerful punch in the past several months, with the iShares Nasdaq Biotechnology ETF (IBB) down 23% over the past 12 months. That being said, the following article will discuss the hedge fund activity around Biogen Inc. (NASDAQ:BIIB), which is perceived to be among the most attractive bargains in the biotech industry at the moment.
Is Biogen Inc. (NASDAQ:BIIB) going to take off soon? Hedge funds are in a bullish mood. The number of bullish hedge fund positions moved up by 11 lately. Biogen was in 71 hedge funds’ portfolios at the end of the fourth quarter of 2015. There were 60 hedge funds in our database with BIIB positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Accenture Plc (NYSE:ACN), Abbott Laboratories (NYSE:ABT), and Union Pacific Corporation (NYSE:UNP) to gather more data points.
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Biogen Inc. (NASDAQ:BIIB) is a global biopharmaceutical company that develops therapies for the treatment of neurodegenerative diseases, hematologic conditions and autoimmune disorders. The shares of Biogen are down 36% over the past 52 weeks, as investors have become increasingly worried about the weakening sales growth of the company’s top-selling sclerosis drug, TECFIDERA. The company’s net product revenues totaled $9.19 billion for 2015, which marked an increase of 12.0% year-on-year. TECFIDERA revenues reached $3.64 billion in 2015, up from $2.91 billion in 2014 and $876.1 million in 2013. This exceptional growth has been driven by fast-increasing unit sales volume in existing markets and additional markets, as the company continues to expand the presence of this drug all around the world.
In its third-quarter letter to investors, Trapeze Asset Management, founded by Herbert and Randall Abramson, discussed the firm’s investment in Biogen Inc. (NASDAQ:BIIB). The letter said the following about the biopharmaceutical company:
:”Shares of biotechnology giant Biogen offered an attractive opportunity recently as investors focused on the known short-term growth challenges. We are looking past the third-party payer and patent concerns and expect Biogen to resume mid-to-high single-digit growth in the medium term. We believe the core patent protected portfolio is worth $215 per share while the company’s net cash balance sits at $18 per share. The robust brain disease pipeline is top tier and could be worth over $150 per share. We value the company at $380.”
The shares of Biogen are currently trading 13.11-times expected earnings, above the forward P/E multiple of 12.1 for the Biotechnology industry. However, it should be noted that Biogen’s sales of TECFIDERA and TYSABRI, which is another multiple sclerosis drug, continue to grow at a solid pace even though TYSABRI revenues were somewhat pressured by pricing reductions in some European countries.
Now, let’s analyze the new action surrounding Biogen Inc. (NASDAQ:BIIB).