Leading biotechnological company Regeneron Pharmaceuticals, Inc. (REGN) has gained steadily over the past few years supported by its numerous FDA-approved treatments, along with numerous products in development. The stock has gained 48.6% over the past three years and closed Friday’s trading session at $475.17.

The company also reported a 30% year-over-year increase in its total revenue in the fourth quarter (ended December 31, 2020), and its net income increased 45.1% year-over-year to $1.15 billion. 

Along with continuing its work on its REGEN-COV, it is also expected to expand the market reach of Dupixent and launch new medicines in the coming quarters.

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So, here’s what we think could shape REGN’s performance in the near term:

Impressive Historical Growth

REGN’s revenue and EPS have increased at CAGRs of 12.3% and 43.5%, respectively, over the past three years. This can be attributed to the company’s strong portfolio of products. It has nine FDA-approved medicines and more than 30 product candidates in clinical development across multiple therapeutic areas. Its EBITDA and total assets have increased at CAGRs of 16.6% and 25.1%, respectively, over the past three years.

Several Positive Developments

Today, REGN announced that its Phase 3 trial of recently infected asymptomatic COVID-19 patients showed that its REGEN-COV reduced the overall risk of progressing to symptomatic COVID-19 by 31% and by 76% after the third day. Also, a National Institutes of Health-sponsored study reported on March 30that EYLEA, which was developed by REGN, was successful in reducing the risk of developing vision-threatening complications by 68%.

Last month, REGN’s  Libtayo monotherapy became the first medicine to demonstrate an improvement in overall survival in women with recurrent or metastatic cervical cancer. Also,  that month, the FDA accepted the supplemental Biologics License Application (sBLA) for Dupixent for review as an add-on treatment for children aged 6 to 11 years with uncontrolled moderate-to-severe asthma.

Reasonable Valuation

In terms of forward non-GAAP price/earnings ratio, REGN’s 10.56x is 57.5% lower than the industry average 24.87x. In terms of forward price/sales ratio, the stock’s 4.08x is 44.9% lower than the industry average 7.40x. Also, its forward EV/sales of 3.75x is lower than the industry average  6.96x.

Consensus Price Target Indicates Solid Upside

REGN has an average broker rating of 1.48. Wall Street analysts expect the stock to hit $647.96 in the near term, which indicates a potential upside of 36.4%.

POWR Ratings Reflect Favorable Outlook

REGN has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different factors with each factor weighted to an optimal degree. 

Our proprietary rating system also evaluates each stock based on eight different categories. REGN has an A grade for Value, in sync with its lower-than-industry valuation ratios.

The stock has a B grade for Growth. This is consistent with analysts’ expectations that its EPS and revenue will increase 43.8% and 41.7%, respectively, in its fiscal year 2021.

It also has a B grade for Quality. This is in sync with its impressive ROE and ROA values of 31.8% and 12.9%, respectively.

REGN is ranked #5 of 491 stocks in the Biotech industry. Click here to see REGN’s ratings for Stability, Sentiment, and Momentum as well.

Click here to access 27 other top-rated stocks in the same industry.

Bottom Line

The company not only recently announced positive results from a Phase 3 trial assessing the ability of REGEN-COV, but also announced positive developments related to other products, such as Libtayo and Dupixent. REGN is expected to witness steady demand for its products in the coming months given that its medicines are designed to help patients with eye diseases, cancer and cardiovascular and metabolic diseases, among others. So, we think It’s wise to buy the stock now because  it is trading at a discount to its peers. 

Click here to checkout our Healthcare Sector Report for 2021

REGN shares were trading at $472.29 per share on Monday afternoon, down $2.88 (-0.61%). Year-to-date, REGN has declined -2.24%, versus a 10.37% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...

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