Earnings Preview: Biogen

Biogen Idec Inc. (BIIB - Analyst Report) is slated to announce its fourth quarter and fiscal 2011 results on January 31. The Zacks Consensus Estimate for the fourth quarter is $1.46, 3.5% above the year-earlier earnings of $1.41. The Zacks Consensus Estimate for full year 2011 is $5.82 per share, in line with the company’s expectations of posting earnings in excess of $5.70 per share.

Third Quarter Highlights

Biogen Idec Inc. reported third-quarter earnings per share of $1.59, well above the Zacks Consensus Estimate of $1.51 and the year-earlier figure of $1.33. Performance was boosted by higher revenues. Revenues increased 11.4% to $1.3 billion, with the multiple sclerosis franchise being the primary growth driver.

Third quarter Tysabri revenues came in at $277 million, up 26% from the prior period. Global in-market net sales of Tysabri, which is partnered by Elan Corp. (ELN - Snapshot Report), came in at $393 million (up 28%). Tysabri sales should reach $1.5 billion in 2011.

Meanwhile, Biogen’s lead multiple sclerosis product Avonex posted third quarter sales of $682 million (up 6%). Rituxan revenues increased 3% to $266 million. A detailed discussion is available here.

Agreement and Magnitude of Estimate Revisions

For the fourth quarter of 2011, only 1 of the 7 analysts following Biogen reduced the estimate over the last 30 days. Over the same period, 1 analyst raised their estimates for the fourth quarter. Over the last 7 days, only 1 analyst reduced their estimate for the fourth quarter. As a result of the revision in estimates, fourth quarter 2011 estimates are down by a cent to $1.46 per share.

For fiscal 2011, there have been only downward revisions with 2 analysts reducing their estimates in the last 7 and 30 days. As a result of the downward revision in estimates, fiscal 2011 estimates are down by 2 cents to $5.82 per share.

The downward revisions mainly reflect the impact of currency fluctuations and higher research and development costs.

Earnings Surprise

Biogen has usually delivered a positive earnings surprise over the past few quarters. While earnings in the last quarter of 2010, first and third quarters of 2011 exceeded expectations, second quarter 2011 earnings came in below expectations. The average earnings surprise for the last four quarters was 4.47%. Fourth quarter 2011 earnings are expected to miss by 5 cents.

Recommendation

We currently have a Neutral recommendation on Biogen, which carries a Zacks #3 Rank (short-term Hold rating). Key products, Avonex and Tysabri, should continue contributing significantly to sales. Meanwhile, we are also pleased with Biogen’s intention to streamline its pipeline.

Read the full analyst report on ELN

Read the full analyst report on BIIB