Over the past six months, Biogen’s stock price fell to $125.58. Shareholders have lost 16.3% of their capital, which is disappointing considering the S&P 500 has climbed by 5.7%. This might have investors contemplating their next move.
Is now the time to buy Biogen, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Is Biogen Not Exciting?
Despite the more favorable entry price, we're swiping left on Biogen for now. Here are three reasons why there are better opportunities than BIIB and a stock we'd rather own.
1. Revenue Spiraling Downwards
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Biogen struggled to consistently generate demand over the last five years as its sales dropped at a 7.4% annual rate. This wasn’t a great result and is a sign of lacking business quality. 
2. Revenue Projections Show Stormy Skies Ahead
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Biogen’s revenue to drop by 6.9%, a decrease from its 7.4% annualized declines for the past five years. This projection is underwhelming and implies its products and services will face some demand challenges.
3. EPS Trending Down
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Sadly for Biogen, its EPS declined by 15.1% annually over the last five years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.
Final Judgment
Biogen isn’t a terrible business, but it doesn’t pass our quality test. After the recent drawdown, the stock trades at 7.8× forward P/E (or $125.58 per share). While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We're fairly confident there are better stocks to buy right now. We’d recommend looking at one of our top software and edge computing picks.
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