One of these enterprises was Biogen (BIIB +1.76%), which did quite well in its second quarter. As a reward, investors snapped up the stock, sending it to a nearly 2% gain on the day. This beat the S&P 500 index’s 0.2% rise.
A biotech in transition
Before market open that day, Biogen published those quarterly figures. For the period, the big biotech’s revenue was $2.7 billion, 3% higher year over year. The story was quite different on the bottom line, as net income not under generally accepted accounting principles (non-GAAP, or adjusted) slipped to $536 million, or $3.60 per share, from the year-ago profit of $803 million.
Image source: Getty Images.
Despite the bottom-line swoon, Biogen beat on both revenue and profitability. Analysts tracking the stock were, as a group, estimating $2.4 billion for the former line item and $3.17 per share for adjusted earnings per share (EPS).
As has been the case lately for the company, its growth portfolio of medicines was the motor driving the top-line improvement. Drugs in that category collectively raked in $1.06 billion in revenue, a 24% year-over-year improvement.
Higher expenses for items such as upfront and milestone payments, plus higher interest payments from financing needed to acquire Apellis Pharmaceuticals, affected the biotech‘s adjusted net income line.
Today’s Change
(1.76%) $3.62
Current Price
$209.23
Key Data Points
Market Cap
Day’s Range
$206.26 – $218.59
52wk Range
$124.56 – $219.72
Volume
2.4M
Avg Vol
1.3M
Gross Margin
66.29%
Making the right moves
Biogen updated its full-year guidance. It now expects revenue to rise at a mid-single-digit percentage rate over 2025, where previously it expected a decline at roughly the same rate.
Some of the same factors that drove down second-quarter adjusted earnings were also the key reasons for management’s reduction in annual adjusted net income. This guidance was lowered to $12 to $13 per share, from the preceding $14.25 to $15.25.
Usually when a company cuts guidance, particularly for the bottom line, investors react negatively. It’s telling that this didn’t happen in this case because Mr. Market realizes — correctly, I believe — that Biogen’s pivot is working, and the growth portfolio will continue to do exactly what it says on the label.
