Why Biogen Inc. (BIIB) is a Top Value Stock for the Long-Term

For both seasoned and new investors, maximizing the potential of the stock market while investing with confidence is often a primary objective. Tools like Zacks Premium can greatly assist in achieving this goal.

Zacks Premium is a well-regarded research service that empowers investors to enhance their knowledge and confidence. It provides daily updates on the Zacks Rank, Zacks Industry Rank, the Zacks #1 Rank List, detailed Equity Research reports, and specialized stock screens.

An important part of the Zacks Premium service is the Zacks Style Scores.

What are the Zacks Style Scores?

The Zacks Style Scores are designed to complement the Zacks Rank. They evaluate stocks based on three popular investment styles and help investors identify stocks with the highest potential for outperforming the market within the next 30 days.

Each stock receives a rating from A to F based on its value, growth, and momentum characteristics. In this rating system, an A is superior to a B, and a B is better than a C, illustrating that a higher score indicates a better chance for stock outperformance.

The Style Scores are divided into four categories:

Value Score

This score is focused on value investing, aiming to discover stocks that are priced below their true value before the broader market becomes aware. The Value Style Score uses numerous ratios, including P/E, PEG, Price/Sales, and Price/Cash Flow, to identify the most appealing and undervalued stocks.

Growth Score

For growth investors, identifying companies with solid financial health and a promising future outlook is crucial. The Growth Style Score evaluates projected and historical earnings, sales, and cash flow to uncover stocks likely to achieve long-term, sustainable growth.

Momentum Score

Momentum investing adheres to the principle "the trend is your friend." This strategy capitalizes on upward or downward price movements in stocks. The Momentum Style Score examines factors such as short-term price changes and monthly earnings estimate shifts to indicate optimal times for investing in high-momentum stocks.

VGM Score

For those interested in a blended approach, the VGM Score integrates all three investing styles into one comprehensive measurement. It ranks stocks based on combined characteristics of value, growth, and momentum, helping investors pinpoint companies with compelling attributes across all three categories.

How Style Scores Work with the Zacks Rank

The Zacks Rank is a proprietary stock-rating framework that focuses on earnings estimate revisions, which are adjustments to a company's expected earnings. This rating system aids investors in constructing a winning portfolio.

The Zacks Rank has demonstrated impressive performance—stocks rated #1 (Strong Buy) have achieved an impressive average annual return of +25.41% since 1988, outpacing the S&P 500 by more than double. However, with a large number of rated stocks, investors can find over 200 companies classified as Strong Buys, along with around 600 stocks ranked #2 (Buy) on any given day.

This vast selection can be daunting for investors to navigate while determining which stocks align with their investment strategies.

Here, the Style Scores play a pivotal role.

When selecting stocks, it is advisable to prioritize those with a Zacks Rank of #1 or #2 that also boast Style Scores of A or B. If an investor is considering a stock with a #3 (Hold) rating, it should still possess A or B Style Scores to optimize its potential upside.

Importantly, the direction of a company's earnings estimate revisions should always be a crucial aspect in stock selection since the Style Scores are designed to work in tandem with the Zacks Rank.

A stock rated #4 (Sell) or #5 (Strong Sell), even if it features Scores of A and B, is nonetheless facing declining earnings forecasts, which increases the likelihood of a drop in share price.

Therefore, it is advantageous to accumulate stocks with a #1 or #2 Rank alongside A or B Scores for a more robust investment portfolio.

Stock to Watch: Biogen Inc. (BIIB)

Located in Cambridge, MA, Biogen Inc. is a prominent biotechnology company specializing in the development of innovative therapies for serious neurological and neurodegenerative diseases. Its core growth sectors focus on multiple sclerosis (MS), neuroimmunology, Alzheimer’s disease (AD), dementia, and movement disorders such as Parkinson's disease, as well as neuromuscular disorders like spinal muscular atrophy (SMA) and amyotrophic lateral sclerosis (ALS), along with ophthalmology.

As per the Zacks Rank, BIIB currently holds a #3 (Hold) rating with a VGM Score of B.

The company has an impressive Value Style Score of A, supported by favorable valuation metrics, including a forward P/E ratio of 9.31, making it a noteworthy consideration for value investors.

Additionally, in the last 60 days, four analysts have revised their earnings estimates for fiscal 2024 upwards. The Zacks Consensus Estimate for BIIB has increased by $0.04, now sitting at $16.43 per share. Notably, the company has an average earnings surprise of 10%.

With a reliable Zacks Rank and high-performing Value and VGM Style Scores, Biogen Inc. (BIIB) should definitely be on investors' radar.

Biogen, value, investment