Biogen Inc (NASDAQ: BIIB ) stepped into the earnings confessional this morning, and the 22% year-over-year decline in earnings were less inspiring than analysts were hoping for. Yes, adjusted earnings of $5.04 per share came in higher than the consensus target for $4.96 per share.
Source: Biogen via YouTube
However, the 1% rise in revenue to $2.87 billion wasn't enough to hit the $2.94 billion mark Wall Street was looking for.
There were some highlights, however, as sales of Biogen's multiple sclerosis drug Tecfidera came in at $1 billion on the quarter to make up roughly 40% of product revenue. The company's two hemophilia drugs saw much faster growth, bringing in $242 million combined. However, Tecfidera results were marred by a $454.8 million litigation settlement and licensing charges.
BIIB stock traders appear to have decided that the results were good enough, with the shares trading higher by more than 1% heading into the open. Technically speaking, Biogen needs some positive momentum after plunging more than 14.5% since November.
That said, while Biogen stock is bouncing off its early-November lows, shares still face overhead resistance at $280 and their 200-day moving average in the $285 region.
Despite this poor price action, analysts remain in high spirits when it comes to Biogen stock. Currently, data from Thomson/First Call reveals that 16 of the 25 analysts following BIIB stock rate it a "buy" or better, with no "sell" ratings to be had. Furthermore, the 12-month consensus price target of $340.51 represents a healthy premium of about 24% to yesterday's close.
However, given the lack of any major bullish news in this morning's quarterly report, analysts may be reluctant to upgrade BIIB stock or boost their price targets.
Click to Enlarge Options traders, meanwhile, are decidedly bearish on BIIB's prospects. As of the close yesterday, the February put/call open interest ratio rested at 1.49, with puts easily outnumbering calls among options set to expire next month.
Currently, peak Feb. put OI totals 4,300 contracts at the out-of-the-money $270, with another 3,700 at the in-the-money $390 strike. Peak Feb. call OI, meanwhile, numbers 4,300 contracts at the $300 strike.
While these strikes may seem out the realm of possibility, implieds are pricing in a potential 8.4% move through February expiration. This places the upper bound just shy of $300 and the lower bound at about $252.
With BIIB trading near oversold levels, and nothing horrible in today's quarterly report, the shares should be able to ride the broad-market rally higher off this near-term bottom.
2 Trades for BIIB Stock
Call Spread: For those traders looking to capitalize on bullish market headwinds and bargain hunting action in Biogen stock, a Feb $275/$285 bull call spread could fit the bill.
At last check, this trade was offered at $4.25, or $425 per pair of contracts. Breakeven lies at $279.25, while a maximum profit of $5.75, or $575 per pair of contracts, is possible if BIIB closes at or above $285 when February options expire.
Put Sell: Alternately, if you're not sold on a BIIB rally, a Feb $270 put sell might be a way to capitalize on technical support.
At last check, this put was bid at $9.50, or $950 per contract. The upside to this put sell strategy is that you keep the premium as long as BIIB stock closes above $270 when February options expire next month. The downside is that should BIIB trade below $270 ahead of expiration, you could be assigned 100 shares for each sold put at a cost of $270 per share.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.