Biogen Inc Valuation – February 2016 Update $BIIB

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor - November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Biogen Inc (BIIB) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Biogen Inc., formerly Biogen Idec Inc., is a global biopharmaceutical company. The Company is focused on discovering, developing, manufacturing and delivering therapies for neurological, autoimmune and hematologic disorders. The Company develops, manufactures and markets products designed for the treatment of multiple sclerosis (MS) and hemophilia A and B. The Company’s marketed products include AVONEX, PLEGRIDY, TECFIDERA, TYSABRI, FAMPYRA for multiple sclerosis (MS), ALPROLIX for hemophilia B, and ELOCTATE for hemophilia A, among others. It also collaborates on the development and commercialization of RITUXAN (rituximab), which is a monoclonal antibody for the treatment of non-Hodgkin’s lymphoma, chronic lymphocytic leukemia and other conditions and share profits and losses for GAZYVA, which is for the treatment of chronic lymphocytic leukemia.


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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.


Downloadable PDF version of this valuation:

ModernGraham Valuation of BIIB – February 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $60,656,649,007 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.60 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 456.67% Pass
6. Moderate PEmg Ratio PEmg < 20 19.68 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.35 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.60 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.58 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $13.58
MG Growth Estimate 15.00%
MG Value $522.89
Opinion Undervalued
MG Value based on 3% Growth $196.93
MG Value based on 0% Growth $115.44
Market Implied Growth Rate 5.59%
Current Price $267.23
% of Intrinsic Value 51.11%

Biogen Inc does not qualify for either the Enterprising Investor or the more conservative Defensive Investor.  The Defensive Investor is concerned with the lack of dividends along with the high PB ratio.  The Enterprising Investor is concerned by the level of debt relative to the net current assets along with the lack of dividends.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time or proceed with a cautious speculative attitude.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $4.68 in 2012 to an estimated $13.58 for 2016.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.59% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Biogen Inc (BIIB)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

BIIB Charts February 2016

Net Current Asset Value (NCAV) -$15.39
Graham Number $126.09
PEmg 19.68
Current Ratio 2.60
PB Ratio 6.35
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0



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Most Recent Balance Sheet Figures

Balance Sheet Information Dec2015
Total Current Assets $6,700,300,000
Total Current Liabilities $2,577,700,000
Long-Term Debt $6,521,500,000
Total Assets $19,504,800,000
Intangible Assets $6,748,900,000
Total Liabilities $10,129,900,000
Shares Outstanding (Diluted Average) 222,900,000

Earnings Per Share History

Next Fiscal Year Estimate $16.80
Dec2015 $15.31
Dec2014 $12.37
Dec2013 $7.81
Dec2012 $5.76
Dec2011 $5.04
Dec2010 $3.94
Dec2009 $3.35
Dec2008 $2.65
Dec2007 $1.99
Dec2006 $0.63
Dec2005 $0.47
Dec2004 $0.07
Dec2003 -$4.92
Dec2002 $0.85
Dec2001 $1.78
Dec2000 $2.16
Dec1999 $0.47
Dec1998 $0.30
Dec1997 $0.20
Dec1996 $0.09

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $13.58
Dec2015 $11.07
Dec2014 $8.29
Dec2013 $5.90
Dec2012 $4.68
Dec2011 $3.89
Dec2010 $3.04
Dec2009 $2.34
Dec2008 $1.61
Dec2007 $0.61
Dec2006 -$0.25
Dec2005 -$0.58
Dec2004 -$0.74
Dec2003 -$0.74
Dec2002 $1.27
Dec2001 $1.32
Dec2000 $0.94

Recommended Reading:

Other ModernGraham posts about the company

13 Best Stocks For Value Investors This Week – 10/17/15
The Best Companies of the Pharmaceuticals Industry – August 2015
The 20 Best Stocks For Value Investors This Week – 7/25/15
Biogen IDEC Inc. Analysis – July 2015 Update $BIIB
Biogen IDEC Quarterly Valuation – April 2015 $BIIB


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The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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