Biogen-Idec Looks Good Once Again

On October 16th, shares of Biogen-Idec (BIIB) gained $13 to hit $82 based on rumors that the company had put itself up for sale. That day I recommended an aggressive sell because of the price tag and uncertainties around finding a possible suitor.

Thursday Biogen-Idec announced that it did not find a buyer and it was going to continue as a stand alone company. BIIB shares lost about $20 and was trading as low as $54, much lower than its share price before all the rumors began when the stock was in the $60s.

I like BIIB once again based on valuations and oversold technical conditions. The company is expected to earn over $3 share in 2008 which puts the forward PE at a cheap 18. Tysabri, their expensive treatment for MS, will continue to gain momentum in 2008 and the company expects to have 100,000 patients enrolled by 2010.

Disclosure: The author has a long position in Biogen-Idec.

Comments

[Dan Jacome:]

yes, but you have to wonder why big pharma (PFE, AMGN) didn't bite. MEDI and PHRM al went without fuss, something @ BIIB didn't click. On the other hand, the risk reward is better with all the takeout noise backed out of the stock

My health care picks are: LIFC, AMED, GENZ, and PGRO.

2007 Dec 17 01:59 AM

[borisb:]

i agree, the 50s pricing long(s) will probably turnout to be buying low. also BIIB might make its own aqusitions such as a Protein Design Labs and thus the business plan would progress.

2007 Dec 23 09:48 AM