Stock (Symbol) |
Regeneron (REGN) |
Stock Price |
$390 |
Sector |
| Healthcare |
Data is as of |
| October 10, 2016 |
Expected to Report |
| Nov 4 |
Company Description |
 REGN, Inc. is an integrated biopharmaceutical company that discovers, invents, develops, manufactures and commercializes medicines for the treatment of serious medical conditions. REGN commercializes medicines for eye diseases, colorectal cancer, and a rare inflammatory condition and has product candidates under development in other areas, including hypercholesterolemia, oncology, rheumatoid arthritis (RA), asthma and atopic dermatitis. REGN’s marketed products include EYLEA (aflibercept) injection, ZALTRAP (ziv-aflibercept) injection for intravenous infusion and ARCALYST (rilonacept) injection for subcutaneous use. The Company has 17 product candidates in clinical development. Its product candidates consist of two trap-based clinical programs and 15 human monoclonal antibody product candidates. REGN has generated each of the antibodies using its VelocImmune technology. Source: Thomson Financial |
Sharek’s Take |
 Regeneron’s (REGN) “next blockbuster” isn’t providing the boost that had been expected. Regeneron’s main source of revenue is Eylea which treats molecular degeneration, the leading cause of blindness in the US. The company was expected to have another blockbuster in Praluent, which lowers “bad” LDL-cholesteral in patients with heart disease who need more than the standard treatment. Praluent was approved by the FDA last year, but so far sales of the new drug have been disappointing. Thus, analysts have lowered their 2017 profit estimates from $18.50 to $16.45, $15.42 and $14.49 the past 4 qtrs. Regeneron has a good pipeline of 15 other drugs in development, including Sarilumab, which treats rheumatoid arthritis, and Dupixent (dupilumab) which could help asthma and/or atopic dermatitis. Dupixent has achieved clearing or near-clearing of skin lesions in testing, but hasn’t received regulatory approval yet. Regeneron has been basing here, and technically looks to be at a decent buy point here around $380. But profit growth is negative right now and the poor play of Praluent is causing estimates to fall. I’m staying on the sideline for now. |
One Year Chart |
 Profit growth has been weak for three straight qtrs and that trend looks to continue the next couple of qtrs. Last qtr the company made $2.82 which beat the street by 20 cents. But this estimate was slashed by $1.15 the prior three qtrs so I wouldn’t really call that a beat. After the dust settled analysts took their 2016 estimate up a bit from $10.84 to $11.04 but dropped 2017’s from $15.42 to $14.49. 2018’s estimate also got slashed, from $19.29 to $17.98. Profit Estimates for the next 4 qtrs are -21%, 0%, 35% and 27%. But we can’t get excited about better growth around the corner as that might not materialize. |
Fair Value |
 A couple qtrs ago I took my Fair Value down from 42x earnings to 25x. Now I’m taking it up to 35x earnings. Even though this stock seems to have good upside in 2017, I feel 2017 profit estimates will continue to decline and thus the Fair Value could drop as well. |
Bottom Line |
 Regeneron had a great run on the back of Eylea, and that was expected to continue with Praluent, but this new drug hasn’t lived up to the hype and now analysts have been taking their estimates lower. Right now the stock is at a decent valuation of 35x earnings and is finding support here at $380, but I feel estimates will continue to decline. I’m on the sidelines with this stock until estimates can stabilize or Regeneron can unleash another $1 billion drug. |
Power Rankings |
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N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
