Biogen Inc (BIIB)

Conclusion

Biogen discovers, develops, manufactures and delivers therapies, mainly for multiple sclerosis (TECFIDERA, OCREVUS, TYSABRI), spinal muscular atrophy (SPINRAZA) and Alzheimer's disease (LEQEMBI), and it also sells biosimilars. At 254.87 USD on 2026-11-09, the market capitalisation is 37.7 billion USD.

The verdict is overvalued. The price-to-earnings ratio of 108.3 compares with a ten-year median of 15.5, and EV/EBITDA of 30.5 compares with 9.7. The DCF gives 206.94 USD per share and the fair value from historical multiples is 216.30 USD. The fair value band runs from 169.30 to 253.95 USD with a midpoint of 211.62 USD, a margin of safety of -17.0% at the current price. The reverse DCF implies growth of 3.4%, while five-year revenue CAGR is -6.1% and five-year free cash flow per share CAGR is -9.3%.

What holds the case up is earnings quality: free cash flow conversion of 673.2% on a trailing basis, eight earnings beats in eight quarters, and an Altman Z-score of 3.15. What would break it is the return on capital, with ROIC of 1.8% against a WACC of 8.05%, followed by net debt to EBITDA of 4.49 and interest coverage of 1.86.

Financial health

Financial health is red, held back by leverage and thin interest cover, while liquidity and the Altman score hold up. The current ratio is 1.95 and the quick ratio 0.82, both as of 2026-09-30. Net debt to EBITDA stands at 4.49 and interest coverage at 1.86, both assessed as bad, while debt to equity is 0.41. The Altman Z-score is 3.15, in the safe zone. Insolvency risk: low, about 0.12% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is green, supported by free cash flow conversion, the Beneish score and buybacks, while the Piotroski score is 4 of 9. Free cash flow conversion is 673.2% on a trailing basis and 118.4% over five years. The accrual ratio is -0.0317, and stock-based compensation is 1.4% of revenue, leaving free cash flow after stock compensation of 2.20 billion USD. Shares outstanding fell at a five-year CAGR of -1.9%, which means buybacks. The Beneish M-score is -2.60, a reading that makes manipulation unlikely. Biogen beat estimates in all 8 of the last quarters, by an average of 20.2%. Current-year estimates moved up 0.5% over 90 days, and next-year estimates moved down 2.0%, with expected growth of 29.9%.

Profitability

Profitability is red because returns on capital sit well below the cost of capital. Return on invested capital is 1.8% against a WACC of 8.05%, a ROIC minus WACC of -6.2%, which is described as value-destroying. The five-year median ROIC is 9.0%. Margins are far below their ten-year medians: gross margin is 70.1% against 83.6%, operating margin 7.6% against 31.3%, and net margin 3.4% against 25.2%. Operating margin stability is 0.31. Return on equity is 1.8%. The 2025 DuPont split shows a net margin of 13.2%, asset turnover of 0.33 and an equity multiplier of 1.61, so the weak return comes mainly from low asset turnover and a thin margin rather than from leverage.

Growth

Growth is red, as revenue and earnings have shrunk over the medium term. Revenue compound growth is -1.2% over three years, -6.1% over five and -0.9% over ten. Earnings per share fell at -25.0% over three years, -18.7% over five and -5.4% over ten. Free cash flow per share grew 21.3% over three years but fell -9.3% over five years and rose just 0.5% over ten. Revenue grew in 5 of the last 10 years. The next-year EPS estimate of 29.9% growth is the one positive growth signal, but it rests on forecasts rather than delivered results.

Valuation

Valuation is red, as the price sits above most measures of value. The price-to-earnings ratio of 108.3 is a premium of 597.3% to its ten-year median of 15.5. EV/EBITDA of 30.5 is a premium of 213.4% to 9.7, and price-to-free-cash-flow of 16.1 is a premium of 17.8% to 13.6. Price-to-sales of 3.66 is a premium of 0.6% to 3.64, while price-to-book of 1.99 is a discount of 43.2% to 3.50. The DCF gives 206.94 USD per share at a discount rate of 8.9%, with 2.5% terminal growth and no near-term growth. The fair value from historical multiples is 216.30 USD. The fair value band runs from 169.30 to 253.95 USD with a midpoint of 211.62 USD, a margin of safety of -17.0%. The reverse DCF implies growth of 3.4%, against five-year revenue CAGR of -6.1%. The fair value is built on fixed assumptions, not a price target. Biogen pays no dividend.

Risks

Each weak number adds pressure. Net debt to EBITDA of 4.49 leaves little room if earnings fall further, and interest coverage of 1.86 means operating profit covers interest less than twice, so a small drop in profit would strain debt service. ROIC of 1.8% against a WACC of 8.05% means new investment currently earns less than its cost of capital. If revenue (-6.1% five-year CAGR) and EPS (-18.7% five-year CAGR) keep shrinking, that gap stays open. Terminal value makes up 53% of the DCF, so its result depends on long-term assumptions. A debt maturity schedule and revenue by segment are not available, which limits how far refinancing and product-level risk can be judged. This analysis relies only on the figures provided as of the stated dates.