Stock (Symbol) |
Regeneron (REGN) |
Stock Price |
$491 |
Sector |
| Healthcare |
Data is as of |
| July 1, 2017 |
Expected to Report |
| Aug 2 |
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 |
 Shares of Regeneron (REGN) have surged from a low of $350 earlier in the year to around $500 a share. The move has pushed the P/E to 39, well above the Est. LTG of 19% per share. But what concerns me isn’t the P/E its that the stock has had this amazing move higher as profit growth has been mixed (-10%, +7% and +14% the past three qtrs). I feel the renewed interest of investors in Biotech stocks has pushed this stock higher than it should be. Still, this is a very good Biotech company with around 15 drugs in development. REGN has three main drugs that shape the company’s future: Eylea, Praluent and Dupixent.
Regeneron also just recieved approval for Kevzara, which treats rheumatoid arthritis. But I feel Praluent will be taken off the market by Amgen (REGN is trying an appeal) and that would hurt sales and profits. But really the big story no one is talking about is the Biotech sector had lots of fund inflows into ETFs and those ETFs automatically invest in the largest Biotech stocks — which REGN is one of. Last qtr this stock had a P/E of 30 and this qtr its 39. Regeneron is on my radar, but with profits meh and the P/E so high I’m on the sidelines right now. |
One Year Chart |
 Last qtr Regeneron delivered 10% sales growth and 14% profit growth, which missed estimates of 19% profit growth. Annual profit estimates continue to fall. Both 2017 and 2018 estimates have dropped in each of the last 4 qtrs, 2017’s from $14.49 to $12.73 and 2018’s from $17.98 to $15.24. Now you see why I’m not so hot on this stock. But 2019’s estimate is $18.88 and that would be around a 50% rise in profits in two years. Qtrly profit Estimates are 11%, 5%, 13% and 17%. That’s good, but not great. |
Fair Value |
 REGN’s P/E of 39 is around where it had been the past couple of years. But I think that’s too high. My Fair Value is 35x earnings or $446 a share. |
Bottom Line |
 Regeneron had a great run on the back of Eylea, and Dupixent should be the company’s next blockbuster. But I don’t think analysts are taking numbers down enough for the expected loss of Praluent. REGN is a good Biotech stock with lots of drugs in development, but the recent surge in the stock price isn’t warranted. I feel the stock shot up partly due to investors throwing money into Biotech ETFs. REGN is on my radar, I would look to buy below $450. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
