Why Caution Is Prevailing in Biotechs Into and After Earnings
Biotechnology stocks struggled on Wednesday after Biogen Idec Inc. (BIIB) surprised investors with weaker-than-expected guidance for 2014 earnings.
The struggles also may be due to simple profit-taking. Stocks in the group had huge gains in 2013; the Amex Biotechnology Index jumped 50%. The index is up 8% in January, despite the soft market overall.
Biogen Idec earned $2.34 a share after one-time charges in the fourth quarter, six cents better than expected and up from $1.40 a year ago. The profit jump was due to strong sales of its new multiple sclerosis drug Tecfidera. Revenue jumped 39% to $1.97 billion, ahead of the consensus estimate of 1.93 billion.
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The stock slumped after Biogen offered 2014 earnings guidance of $11.00 to $11.20 a share, less than the Street estimate of $11.63. The company sees revenue growing 22% to 25%, better than the Street estimate of 20% growth.
In late-morning trading, the shares were down 58 cents, or 0.2%, to $305.08, after falling to as low as $292.82. Biogen shares soared 91% in 2013.
Biogen's results came after Amgen Inc. (AMGN) also beat estimates late Tuesday. Profit was up some 30% in the quarter to $1.81 a share, helped in part by a lower tax rate. That beat the Street estimate of $1.64. Revenue was up 13% to $5.01 billion. The company expects 2014 earnings of $7.90 to $8.20. The Street consensus is $8.18. The guidance disappointed investors who wanted more.
Amgen shares were down 33 cents to $120.37. The shares are up about 5.5% this month after a 32.3% gain in 2013.
Two more important biotech companies will report in the few days.
First up is Celgene Corp. (CELG), which reports before Thursday's open. The company is expected to earn $1.54 a share, up from $1.32 a year ago. Revenue is forecast at $1.72 billion, 19.1% higher than a year ago.
Shares were up two cents Wednesday to $160, after falling to as low as $156.28. The shares had gained 115.3% in 2013, but they are down 5.2% this month.
Gilead Sciences Inc. (GILD) reports after Tuesday's close. Analysts expect $0.50 per share in earnings, unchanged from a year ago. The consensus revenue estimate is $2.85 billion, up 10.3% year over year.
Shares were down 37 cents, or 0.5%, to $80.37. They are still up about 7% for the month, after a 104.4% gain in 2013.
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