Morgan Stanley double-upgrades Biogen and says the stock can surge another 30%
- Morgan Stanley on Monday upgraded Biogen from underweight to overweight — a rare double upgrade — citing compelling risk versus reward in the long term.
- The firm also boosted its price target on Biogen to $357 from $263. The new target represents a more than 30% upside from where Biogen closed on Friday.
- Shares of Biogen gained nearly 5% on Monday.
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Biogen got a rare double upgrade on Monday from Morgan Stanley, which boosted its rating of the company to overweight from underweight, citing compelling long-term risk versus reward.
Morgan Stanley also boosted its Biogen price target to $357 from $263. The new figure is more than 30% higher than Biogen's closing price on Friday.
Shares of Biogen jumped nearly 5% during intraday trading on Monday.
"In the near-term, we believe BIIB is likely to face 10%+ in downside pressure due to multiple at-risk generic launches for multiple sclerosis (MS) drug Tecfidera," analysts led by Matthew Harrison wrote Monday.
He continued: "However, we expect investors to quickly look past the Tecfidera downside and start to price in higher odds of success for aducanumab, Biogen's investigational drug which is the first potential disease-modifying therapy for Alzheimer's disease."
Morgan Stanley said that while investors were pricing in a less than 25% chance of success, that will increase to at least 50% as the drug moves closer to approval from the Food and Drug Administration, expected in March.
Investors who take a "wait-and-see approach" could miss a move of up to 20% in the near term for Biogen, the note said.
"While BIIB remains a high-risk/ high-reward stock, we think now is the right time to take the risk," Harrison said.
Biogen has shed roughly 5% year-to-date.
