Biogen (BIIB) Stock | Long Term Analysis | Overvalued or Undervalued |

All right hello and welcome everybody to other stock now sphere today we’re talking about biogen token simple biib now this company is traded on the new york stock exchange and this is a stock that i’ve been wanting to talk about for a little bit i also want to know that this company is really in the health industry i like talking about the health industry because i think it’s a pretty fascinating industry myself and so i want to talk about how this stock works so we’re going to talk about what drugs do very well for this company how this company likes to drive most of its revenue so we’ll be giving a full long-term analysis on this company so you can determine maybe whether you want to hold the stock for maybe 10 plus years or even just even five years or something like that so and then we’re also going to give you a value analysis on this company so we’re going to talk about whether the company is currently overvalued or under about and this is going to be based off of price earnings book value intrinsic value and numerous of the ten goals that we like to talk about in our videos also you can learn about how the value is stock specifically from this video and also from a lot of our other videos in our overvalued or undervalued series so please do feel free to check those out if you’re interested anyway thank you so much for watching if you like this video please do like subscribe it’s about our channel and let’s get this content out to more people that more people understand how biogen works and also the other stocks that we talk about work as well on our channel anyway thank you so much for watching without further ado let’s get started now biogen has a wide array of products that they work with they have legacy drugs that they’ve had for many years and biogen is not a new company it was founded in 1978 and this means that the company at least got about 40 years of experience in this space so i think that this company really does do very well in terms of building its drug portfolio and also offering drugs that are special these are drugs that not everyone’s going to be able to get their hands on unless they buy it through biogen so certain drugs drive most of its revenue here we can see that avenex it drives most of its revenue at about 37.3 percent now this is quite high and this is because this is a very special drug that not everyone can offer if you’re wondering what avenex does essentially it is also called interferon beta i i’m not exactly sure how to pronounce that but the real point is that it treats multiple sclerosis so also known as ms and if you’re wondering what that is essentially what that is is it is an immune system disease that essentially will eat away at some of the nerve cells in your body if anybody can offer a drug that would treat this really well then they will likely spend a fortune on it and that’s how biogen can generate a lot of its revenue biogen has a lot of special drugs like this so this is how biogen can generate a lot of revenue we can see here that even though this disease is not very common at fewer than 200 000 cases in the us per year we still have to understand that people will spend the money in order to help their health so that’s why biogen and i think also other stocks in the health industry have a store of a leg up because a lot of people will spend a lot of money just to stay alive for even a few years longer or simply make their lives less miserable now i do want to note that i am not really into the pharmaceutical space of understanding how all these drugs work you can look into their website and notice that they have a huge product portfolio that they talk about however i’m going to talk about the value of this company which is something that i really like to get into in our videos we can talk about the intrinsic value of the company which is currently staying to be at about 408 dollars a share that is noticeably higher than the company’s current trading value the company is trading at about hundred and eighty dollars a share and the company’s intrinsic values at about 408 dollars a share that is not simply higher this is the projected free cash flow model of calculating the intrinsic value and just so you know the intrinsic value is essentially the fair value of the company in a way you’re essentially trying to figure out where a stock is going to trade towards and intrinsic value is potentially determining what the stock should trade towards over time so if we scroll down we can actually show you how this is calculated and so i like looking at this model specifically if you go gurufocus.com you can find this as well basically what they do is they take a growth multiple which is just the projection of the earnings growth each year so this is at about 12.5 at the moment which is pretty high because this company has been able to generate a lot of growth in the past four grand some pretty noticeably successful drugs over the past few years we also notice that the company has a pretty high free cash flow to say six year average of that so you multiply the free cash flow by the growth multiple and then add that to the total stock of equity which is simply the assets minus the day of the company multiply that by 0.8 to offset the growth multiple at least a little bit and then divide by the shows that staying in the market in order to get the intrinsic value per share of the company now like i always say this is one way of tackling the intrinsic value there are many ways of calculating the intrinsic value so please note that this is definitely not the only way so please do keep that in mind if you’re looking at health stocks you could value them in a different way but i think the projected free cash flow model helps to evaluate the stock pretty well also i have noticed that the projected free cash flow mall may tend to be a little bit lower than what the fair value of the company really is in my opinion for health companies i think the projected free cash flow mall since it is higher than in biogen’s case than the current trading value of the stock i think that just truly proves that the stock may actually be a lot more undervalued than we even expect now we can also understand that the company has a pretty high book value relative to the trading value of the stock you can see the company has a book value currently about 72 dollars and 11 cents that is pretty high for a health company for a health company normally the the book value tends to be maybe a fifth of the of the current trading value of the stock this is actually a fourth of biogen’s trade value so this is actually not too bad in terms of figuring out what the company is valued at this also helps to suggest that the company is undervalued at this point but we can also look at a few more tangles that can really drive the point home i did want to note though that the book value here is simply since it’s higher it’s going to help to support the artistic value even better since the book value is pretty high for this company the intrinsic value actually is going to fluctuate less likely due to the fact that assets don’t tend to change in the company very often so if the company’s book value is at about 72.00 then that means it’s likely not going to change very much over the next few years so that means that the company is likely not going to be very volatile based off of that however this company has been very volatile in the past anyway due to the fact that their earnings have changed we also have to take a note that the company’s priced earnings is very important in determining where the stock should trade towards so that’s something we’ll take a look at as well we can take a look at the name come up the company we can see the company currently has about 449 million dollars of that income over the last quarter so that’s quite a bit of money however that is not as much as they were making in the past so we can see that the company is not making as much money in the past so we can see that things have definitely changed for biogen as a whole we can see that they used to be making about one and a half billion dollars each quarter and then they went down to about 700 million a quarter and now they’re at about 449 million a quarter that is quite a bit lower than what they were so i definitely have taken no of that and that the company’s price earnings has now changed dramatically now the stock has come down quite a bit to correct this change in net income so the company’s profit is definitely moving the share price so this is something that we have to take note of and with the company having a consistently decreasing net income that is not so good at least in terms of trends we can see the company currently has a price tag of about 22. now that is pretty high for this company however if their earnings do go back at least the company’s price turns is gonna be around 10 or even like seven so that is really really low especially for a health company so i would expect that the company’s earnings do come back the company’s trade value will likely rise substantially now i cannot predict that so if you’re interested in the health business and you know a lot about this company specifically please do comment down below as i’m always interested in hearing about what you have to say however in the past the company is an income has dropped and they also recovered quite a bit so i think that with health companies a lot their company income can go up and down quite a bit and quite rather dramatically as you can see as it’s changed from 34 a share over the year to about 12 a share right now and so that is definitely been noticeable change however these things do tend to bounce back especially for biogen because we can note that the company has quite a bit of long-term drugs that will likely be able to generate income for a long period of time now here’s something that i can actually predict we can understand that the company has actual stock buybacks that it does according to seeking alpha the company was willing to repurchase 2.2 million shares over the last quarter which was about 600 million dollars spent at about 272 dollars a share that’s quite a bit of money and the company is still willing to do that over the most recent quarter they have decided to spend about 450 million dollars on repurchasing their own stock and if we take a look at the outstanding shares in the market we can see that that has consistently been decreasing year over year approximately this is due to the fact that the company is buying back their own stock so when the company decreases the outstanding shares in the market that means that the assets are distributed across less shares so that means that the company’s book value is actually going to increase because the company’s book value is simply the shareholder equity divided by the outstanding shares in the market so therefore since the shareholder equity is the ads it’s minus the debt that means that the company should be able to consistently grow in terms of value for its shareholders if the company is willing to buy back their own stock as long as the book value doesn’t change whether the income doesn’t change dramatically etc so we also can understand this well if the company’s chitic value is likely going to increase as well if the company buys back their own stock substantially so it’s very important when a company buys back their own stock and that is why biogen is doing that for its shareholders now unfortunately this company is not offering any dividend if this seems to be due to the fact that the company is spending a lot of money on stock buybacks instead so either way the company is still trying to benefit shareholders so it’s completely understandable the company is not paying out a dividend at this time but we can also understand that if you’re looking for dividend income you’re not going to get that guaranteed dividends that other companies and other health companies may be offering so keep that in mind also these companies does seem to be pretty undervalued at this point in my opinion i also think that this company is going to do very well in the long term because it has specialty drugs with quite a few of those generating a lot of money for the company now hopefully you found this video to be helpful i am not a financial advisor or anything like that so please don’t reach it for investing and this is not financial advice anyway thank you so much for watching if you like this video please do like subscribe if it’s about our channel and please come down below and tell us we think about this company we’ll try to get back to you anyway thanks again for watching have a great day everybody.