Biogen (BIIB 0.23%) has been a volatile investment in recent years and its outlook still remains cloudy at best. That's because the biotech pioneer is facing the loss of exclusivity of its top multiple sclerosis drug Tecfidera. Meanwhile, its Alzheimer's treatment Aduhelm went from a hero to a zero within a span of just months as questions were raised about its efficacy. This has all made generating growth a challenge. 

Now, however, there's renewed hope around Biogen. The company is expecting better-than-expected results this year thanks to another potential Alzheimer's treatment. Shares of Biogen are up 18% year to date, significantly outperforming the S&P 500, which remains down 19%. 

Is now the time to invest in the healthcare stock or is Biogen set to disappoint investors yet again?

Strong earnings and a hike in guidance

On Oct. 25, Biogen released its latest quarterly earnings numbers. Sales for the period ended Sept. 30 were down 10% year over year to $2.5 billion. But net income of $1.1 billion was more than three times the $318.1 million profit that Biogen reported last year (partly as a result of a gain on the sale of a building for $503.7 million).

The company was encouraged by these results and raised its guidance, projecting that revenue will come in at $10 billion to $10.15 billion for the year, up from $9.9 billion to $10.1 billion previously. Its adjusted diluted per-share profit is now estimated to be between $16.50 and $17.15, up from $15.25 to $16.75.

With the stronger numbers, the stock now trades at a price-to-earnings multiple of under 15, which is modest compared to the average healthcare stock, where investors are paying nearly 22 times profits. And Biogen's stock could command more of a premium if there's positive news surrounding lecanemab next year.

Plenty of hope around lecanemab

Biogen's stock is still riding high from the news that its potential Alzheimer's treatment, lecanemab, slowed cognitive decline by 27% in participants involved in phase 3 trials.

Biogen develops lecanemab and shares profits from it with Japanese drugmaker Eisai. The two companies could find out as early as January if lecanemab obtains authorization from the Food and Drug Administration (FDA) under an Accelerated Approval Pathway. Positive news from that could be another catalyst that sends Biogen's stock even higher.

Lecanemab, at its peak, could bring in up to $10 billion in revenue -- about as much as Biogen's entire business will generate this year.

Can Biogen continue to rally?

At around $284, shares of Biogen are now near their 52-week high. Many analysts have set price targets for the stock recently, and at least nine of them see shares of Biogen hitting $300 or more. Goldman Sachs has one of the most bullish outlooks on the stock, setting a price target of $370 for the healthcare company.

There's clearly more room for Biogen's stock to rise higher, but it's all going to depend on lecanemab. With Biogen facing growth competition for its key drug, Tecfidera, the company needs a catalyst to make up for that loss and give investors a reason to rally around the business. If the FDA issues lecanemab full traditional approval (not just under the Accelerated Approval Pathway, which it also granted Aduhelm), then it could be off to the races for Biogen's stock and there could be more analyst upgrades to follow.

Biogen can be a volatile stock to hold and for that reason, I'd suggest holding off until investors see what the FDA decides on lecanemab, because that will inevitably have a huge impact on the stock. Biogen's stock may continue to rise until then, but the upside may be limited until the FDA gives the green light for lecanemab.