The Ratings Game: Biogen’s stock gets a big boost from 2 upgrades a week before earnings

Shares of Biogen Inc. shot up to a more than two-year high Tuesday, after two analysts turned bullish on the biotech company, and became the first to have price targets of at least $400, a week before third-quarter earnings are released.

Stifel analyst Thomas Shrader raised his rating to buy from hold. He lifted his stock price target to $415 from $300, which is 19% above current levels, and is the highest among the 31 analysts surveyed by FactSet.

The second highest target is Mizuho analyst Salim Syed’s $400, which he raised from $319 on Tuesday. He also upgraded the stock to buy from neutral.

The stock

BIIB, +2.91%

 surged 3.2% in afternoon trade, putting it on track for its highest close since July 2015. It has now run up 23% over the past three months, while the iShares Nasdaq Biotechology exchange-traded fund

IBB, +0.59%

 has gained 7.3% and the S&P 500 index

SPX, -0.02%

 has tacked on 3.9%.

FactSet, MarketWatch

“We like what we see at Biogen again,” said Shrader, who had been at a hold rating since March 2015. He said that despite investor concerns over Biogen’s big multiple sclerosis treatment Ocrelizumab, it has “remarkable anti-inflammatory properties.” Shrader is also upbeat on the company’s research and development efforts aimed at large market opportunities.

“Biogen back to basics—MS not imploding, R&D output exploring, investors should be reloading,” Shrader wrote in a note to clients.

Mizuho’s Salim Syed said he believes Biogen will have “clean” third-quarter results, with its treatment for spinal muscular atrophy, Spinraza, expected to “significantly beat consensus” this quarter. Syed also believes concerns over MS competition is overblown, as Biogen’s treatments have different efficacy and safety profiles, which should help the company gain market share.

Biogen is scheduled to report results on Oct. 24, before the market opens. Analysts surveyed by FactSet expect, on average, earnings per share of $5.71, up from $5.19 a year ago. The FactSet consensus of $3.03 billion is up from $2.96 billion.

Spinraza sales are expected to be $243.0 million, up from $203.0 million in the second quarter, and $47.0 million from the first quarter.

Biogen has beat EPS expectations the past nine quarters, and revenue expectations for the past two quarters, and for three of the past nine. The stock slipped 0.6% on the day that second-quarter results were reported, but rose on the day of the previous seven quarters by an average of 4.5%.

The average rating of analysts surveyed by FactSet is currently the equivalent of buy, and the average price target is $343.19.