All in all Regeneron (NYSE:REGN) has had a good 2021, with a 40% increase in its share price since March comparing favorably against the return from the S&P 500 index, which is only up 18% over the same time period. Fresh all time highs were hit in August, and though there was some softness in the share price through September, what we’ve seen in October and so far in November bodes well for the rest of the year.
Last week, investors and Wall Street alike got a fresh look at the internal engine when the company released their Q3 earnings. Revenue for the quarter jumped more than 50% compared to the same quarter last year and was well ahead of what analysts had been expecting. Specifically, the revenue print was $650 million higher than the consensus - an impressive feat for any pharmaceutical company. Similarly, earnings per share also impressed, with the final $14.30 figure coming in a full 30% higher than what analysts had been estimating.
Good Momentum
There was good momentum seen in the company’s EYLEA and Dupixent product lines which saw increases of 12% and 55% year on year growth respectively. In light of all this and unsurprisingly Regeneron’s CEO, Leonard S. Schleifer spoke positively about the company’s growth potential on the earnings call. He said, “Regeneron had another strong quarter of core business growth, with EYLEA and Dupixent reaching more patients than ever and progress made across our diverse pipeline. We secured a new U.S. government supply agreement and are delivering an additional 1.4 million doses of REGEN-COV. Our Biologics License Application for REGEN-COV as treatment and prophylaxis was accepted by the FDA for priority review, with a mid-April 2022 action date.”
Despite all of the positive headlines, shares still traded softly in the aftermath of Monday’s numbers. Specifically, they gapped down 7% at the start of the next trading session - a surprising move considering the strong beat. Perhaps the beat wasn’t good enough. There was clearly strong anticipation for the earnings announcement as seen in the 20% run up that shares experienced in the three weeks prior so we could easily be looking at a buy the rumor, sell the news type of event. However, considering this week’s fall has been mostly recovered already, it’s clear the market sees long term quality in the numbers.
For those of us looking to add some pharma exposure to our portfolios, there are more than enough reasons to like Regeneron, including this recent earnings report. In particular, fresh clinical data from their COVID antibody cocktail trial showed that the product reduced the risk of catching COVID by nearly 82%. In addition to the so-called COVID cocktail, Regeneron has a healthy product and treatment pipeline with lots more in the works as mentioned by Schleifler this week.
Strong Pipeline
He spoke about how during the third quarter, “we announced positive data from Phase 3 trials of Dupixent in chronic spontaneous urticaria and pediatric atopic dermatitis. We also recently announced positive data from Phase 3 trials of Dupixent in eosinophilic esophagitis and prurigo nodularis, and that the FDA approval in pediatric asthma was extended to children as young as six. Finally, our abstracts that will be released today for the American Society of Hematology (ASH) Annual Meeting highlight programs across the hematology portfolio, including our BCMA and C5 antibodies.” All in all Regeneron has more than 30 product candidates in clinical development with upcoming milestones on each providing more than enough catalysts for investors to look forward to.
What all of this means for those of us considering getting involved, is that there are far more reasons to buy Regeneron shares than to avoid them. The company has comfortably
beaten analyst expectations for the most recent quarter, shares are already seeing a strong bid return despite the initial post-earnings drop, and lastly they have a strong product pipeline to see investors well into the coming years. If shares can break their recent high of $657, there’s every reason to think they will surpass their current all time high of $682 and march into the blue sky territory waiting for them beyond.
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