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On Sep 18, we upgraded biotech company, Biogen Idec (BIIB - Analyst Report) to Outperform based on its strong performance in the first half of 2013, raised outlook and improving prospects.

Biogen, which focuses on the development, manufacture and marketing of therapies for the treatment of multiple sclerosis and other autoimmune disorders, neurodegenerative diseases and hemophilia, became a Zacks #1 Rank (Strong Buy) stock shortly after reporting impressive second quarter results.

Why the Upgrade?

Second quarter 2013 earnings came in at $2.30 per share (excluding the impact of stock-based compensation expense), well above the Zacks Consensus Estimate of $1.83 and 26.4% above the year-ago earnings. Revenues increased 21% from the year-ago period to $1.7 billion. Over the past four quarters, Biogen has delivered an average surprise of 15.52%.

Following the release of second quarter results, the Zacks Consensus Estimate for 2013 has gone up 9.6% to $8.77 per share. Moreover, the Zacks Consensus Estimate for 2014 has shot up significantly (up 16.4% to $11.51 per share).

What is the cause for the strong positive bias on the company? Biogen started 2013 on a strong note with the momentum continuing in the second quarter. Second quarter results were primarily driven by the strong performance of Biogen’s new product, Tecfidera. We believe Tecfidera has the potential to become a leader in the oral multiple sclerosis market.

We are also positive on Biogen’s gaining full control over Tysabri, which should continue contributing significantly to sales along with Avonex. Biogen has several development and regulatory catalysts coming up in the next few quarters. Approval for its hemophilia candidates, Alprolix and Eloctate, could lead to their launch in the first quarter and second quarter of 2014, respectively.

Other Stocks to Consider

Besides Biogen, other stocks in the biopharma sector that are currently performing well include Gilead Sciences, Inc. (GILD - Analyst Report), Anthera Pharmaceuticals, Inc. (ANTH - Snapshot Report) and Athersys, Inc. (ATHX - Snapshot Report). While Gilead is a Zacks #1 Rank stock, Anthera and Athersys are Zacks Rank #2 (Buy) stocks.

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