We recently published a list of the 7 Most Undervalued Biotech Stocks To Invest In. In this article, we are going to take a look at where Biogen Inc. (NASDAQ:BIIB) stands against the other most undervalued biotech stocks to invest in.
Trump’s Tariffs and the Pharma Sector
On February 21, Jared Holz, Mizuho Securities America’s healthcare sector strategist, appeared on CNBC to discuss Trump’s tariffs and their effects on the American pharma sector. Although he was unsure of the intention behind these tariffs, he opined that the pharma industry was not all that special when compared to verticals such as industrials and technology, such that President Trump would intend to enlarge its presence in the US.
The tariffs thus encompass the grander plan surrounding how the pharmaceutical industry fits into scaling up domestic manufacturing. A majority of pharma and biotech companies have a significant presence in the US. However, some questions still stand, such as whether they will hire more people in the US compared to Europe or Asia and whether they will bring back more business to America.
Holz was unclear about the answers to these questions, but he believed that anything coming out of Europe or China would obviously be fair game. Further discussing the scenario, he said that boosting manufacturing facilities and capacities from scratch is not an easy endeavor, as it takes considerable years to reach a point where companies can domestically produce at a high rate. Therefore, the impact of tariffs on the production capacity and on-shoring of pharma companies remains fuzzy.
READ ALSO: 10 Best Performing Pharma Stocks So Far in 2025 and 11 Best Pharma Stocks to Buy According to Hedge Funds.
How Will the Pharma Industry Perform in 2025?
We further discussed the potential impacts of Trump’s tariffs and the performance of the pharma industry in a recently published article on the 10 Oversold Pharma Stocks to Buy According to Analysts. This excerpt from the article offers another analyst’s point of view:
“On February 20, Emily Field, Head of European Pharma Research at Barclays, appeared on CNBC to discuss the dynamics of the pharmaceutical sector, the impact of US tariffs, and the performance of obesity drugs. She believed the industry may not underperform this year, at least in the first half. However, there are still several questions surrounding the performance of obesity drugs, as major players in the domain have exhibited contrasting previous year performance.
Talking about the tariffs, she said that their materialization poses a big open question for the pharmaceutical sector as some companies assemble their products in the US after manufacturing them abroad. Manufacturing costs are thus pretty low for these companies, which is a significant point to consider when determining the impact of tariffs. She believed that absorbing the additional cost of the tariffs would be very manageable for these companies. The market has reached the tail-end of the earnings season, and the situation hasn’t come up much on earnings calls over this quarter.”
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 15 biotech and biopharma stocks with a forward P/E of less than 15. We then selected the top 7 with the highest number of hedge fund holders as of Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A patient receiving physical therapy for a neurological disease.
Biogen Inc. (NASDAQ:BIIB)
Forward P/E: 9.07
Number of Hedge Fund Holders: 52
Biogen Inc. (NASDAQ:BIIB) is a global biopharmaceutical company that discovers, develops, and delivers advanced therapies for serious diseases across the globe. Its medicine portfolio treats multiple sclerosis (MS), spinal muscular atrophy (SMA), Alzheimer’s disease, and amyotrophic lateral sclerosis (ALS). The company has an elaborate marketed product portfolio for MS, including TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, TYSABRI, and FAMPYRA. It also markets SPINRAZA to treat SMA, SKYCLARYS for the treatment of Friedreich’s Ataxia, and other drugs.
The company is focusing on the four products it launched last year for Alzheimer’s, Friedreich’s ataxia, depression, and ALS. The products hold significant potential as the first disease-modifying agents in each of these diseases. Biogen Inc. (NASDAQ:BIIB) has also reprioritized its pipeline, focusing on a number of key projects to boost its business success. It has various key developments set for 2026, marking a multi-billion dollar portfolio.
Biogen Inc. (NASDAQ:BIIB) is also making continued progress in its commercial portfolio. Fiscal Q4 2024 global in-market sales for LEQEMBI, which treats Alzheimer’s, reached approximately $87 million, representing positive continued sequential growth. Global SKYCLARYS revenue of around $102 million in the quarter also showed continued patient growth, as the drug has nearly doubled the number of patients on therapy globally compared to 2023. Biogen Inc. (NASDAQ:BIIB) also reported a 3% year-over-year growth in its total revenue in fiscal Q4 2024, reaching $2.5 billion. Its non-GAAP diluted EPS was $3.44, reflecting a 17% year-over-year growth. The company takes the fifth spot on our list of the 7 most undervalued biotech stocks to invest in.
Patient Capital Opportunity Equity Strategy stated the following regarding Biogen Inc. (NASDAQ:BIIB) in its Q2 2024 investor letter:
“Biogen Inc. (NASDAQ:BIIB) is another name that we believe is underappreciated. As a global biopharmaceutical business, the company is most well known for their products in multiple sclerosis, spinal muscular atrophy, and most recently Alzheimer’s disease. The new CEO, Christopher Viehbacher, is working to improve the company’s pipeline, most recently with their acquisition of Human Immunology Biosciences Inc. in May. Chris has a strong track record of successful M&A and we expect him to continue that tradition. More importantly, we think the market is currently giving the company no credit for success in their Alzheimer’s indication. While the uptake in Leqembi, their Alzheimer’s product, has been slow, we still see strong long-term potential for a patient population that is dramatically underserved. We find the risk/reward extremely attractive.”
Overall, BIIB ranks 5th on our list of the most undervalued biotech stocks to invest in. While we acknowledge the potential of BIIB as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BIIB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
