Biogen (BIIB) Declines On Earnings | Will It Bounce Back?

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Biogen Inc (NASDAQ: BIIB)

Biogen is down in a big way today after reporting earnings for the second quarter. Overall, earnings were positive, but an update to guidance obviously rubbed investors the wrong way. Today, we’ll talk about the Q2 earnings from BIIB, the change in guidance, how investors reacted, and what we can expect to see from the company moving forward. So, let’s get right to it…

BIIB Beats Earnings Expectations

As mentioned above, Biogen beat earnings expectations in the second quarter. During the quarter, the company was able to produce earnings of $4.22 per share; $0.12 higher than analyst expectations of $4.10 per share. However, revenue came in a bit lower than analysts expected to see. While analysts expected the figure to come in at $2.71 billion for the quarter, the actual figure came in at $2.59 billion.

Biogen Guidance Changes Cause Turbulence In The Market

Although the company was able to produce higher than expected earnings, guidance for the rest of the year is a major concern for investors. Here’s what we saw in the report…

  • Revenue Growth – 2015 revenue growth guidance was dropped to between 6% and 8%. The company said that the guidance decline is largely the result of expectations for the growth of TECFIDERA.
  • GAAP Earnings – GAAP diluted EPS was also decreased from prior guidance; now standing at between $14.25 and $14.70 for the year.
  • Non-GAAP Earnings – Non-GAAP earnings also saw a decline in guidance; now expected to come in at between $15.50 and $15.95 per share.

How Investors Reacted To The News

As mentioned above, it was clear that investors didn’t like what the saw today after the company declined dramatically. Currently (12:37), BIIB is trading at $312.42 per share after a massive loss of 18.86% so far today. While positive earnings usually push the value of a stock up, poor guidance proved to overshadow the positive earnings produced in the quarter for investors.

What We Can Expect To See Moving Forward

Moving forward, I don’t see a massive recovery in store; at least in the short term. However, it is important to remember that price movements in the market tend to happen through a series of overreactions. While the declines are warranted, the size of the decline today is over done. So, Monday I’m expecting to see minor growth as the stock is brought to a more realistic price level. However, I’m not expecting to see any massive gains any time soon.

What Do You Think?

Where do you think BIIB is headed and why? Let us know in the comments below!

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