The historical evidence (for long-term-oriented investors) overwhelmingly supports the argument that the secret to success in stocks is not to get scared out of them — but staying the course isn’t easy, notes value investing expert John Buckingham, money manager and editor of The Prudent Speculator.
More from John Buckingham: Banking Bets from a Leading Value Manager
Biogen (BIIB) discovers, develops and delivers innovative therapies for the treatment of neurodegenerative diseases and autoimmune disorders, leading the $20+ billion global multiple sclerosis (MS) market with its franchise which includes Avonex, Tysabri and Tecfidera.
The shares plummeted in March on news that Biogen discontinued its Alzheimer’s treatment trial (aducanumab), after results from the company’s late-stage study showed that it was unlikely to work.
To be sure, BIIB also faces looming pressure from generics in the next few years for its MS drug Tecfidera and potential competition from Novartis for its spinal muscular atrophy treatment Spinraza.
Nonetheless, we think Biogen’s specialty-market-focused drug portfolio outside of MS, keying on cancer and neurology disorders, is a positive long-term driver.
Beyond the Alzheimer’s setback, the firm’s pipeline has seen progress in MS, pain management, Parkinson’s and ALS. The companh's strong cash flow also allows it to invest and/or seek to grow via acquisitions.
Biogen may not merit as rich a multiple after the Alzheimer’s failure, but the shares now trade for a very low multiple of less than 7 times the next 12-month earnings estimate.
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