Regeneron Pharmaceuticals Is My Value Stock of the Week
Regeneron Pharmaceuticals, Inc. (REGN) has become popular over the past year due to its COVID 19 cocktail treatment. But the company is no one trick p...
Regeneron Pharmaceuticals, Inc. (REGN) has become popular over the past year due to its COVID 19 cocktail treatment. But the company is no one trick pony. It has more than a couple blockbuster drugs, with even more on the way. The best part is that the stock is quite undervalued. Read more to learn why this stock belongs in your portfolio.
Regeneron Pharmaceuticals, Inc. (REGN) discovers, develops, and commercializes products that fight eye disease, cardiovascular disease, cancer, and inflammation. The company has several marketed products, including Eylea, approved for wet age-related macular degeneration and other eye diseases, Praluent for LDL cholesterol-lowering, and Dupixent for atopic dermatitis, asthma, and nasal polyposis.
The company is also developing monoclonal antibodies with Sanofi in immunology and cancer. REGN is also developing bispecific antibodies and antibody cocktails with other collaborators and independently. However, its key growth driver is Eylea, which continues to generate strong revenues from continued label expansions.
Eylea is approved in the United States, EU, Japan, and other countries to treat neovascular age-related macular degeneration, diabetic macular edema, and macular edema. Demographic trends are driving growth in the U.S., including an aging population and an increase in the prevalence of diabetes.
REGN is also working on expanding the drug's label into additional indications. This should further boost sales. For instance, the FDA approved a 12-week dosing interval of Eylea injection in patients with wet AMD. The drug was also approved for the treatment of diabetic retinopathy. More label expansion into additional indications should give the drug access to more patients, leading to more potential for profits.
The company is also benefiting from the approval of Dupixent injection for the treatment of adults with moderate-to-severe atopic dermatitis and asthma. The uptake has been strong for both atopic dermatitis and asthma. Dupixent has also been approved in Europe. Like Eylea, continued label expansion should boost sales even further.
Additional drugs are also providing revenue for the company. For instance, Kevzara was approved in the U.S. for treating adult patients with moderate to severely active rheumatoid arthritis. A few years ago, the FDA approved Libtayo to treat patients with metastatic or locally advanced cutaneous squamous cell carcinoma.
The initial uptake of Libtayo was strong, so REGN is working on expanding its label further. The firm also has a solid pipeline. REGN is resuming enrollment of patients with follicular lymphoma and diffuse large B-cell lymphoma in its monotherapy trials of odronextamab.
But REGN's most popular offering right now is COVID 19 treatment REGEN-COV. The FDA gave Emergency Use Authorization for the antibody cocktail of two monoclonal antibodies (casirivimab and imdevimab). The treatment was designed specifically to block the infectivity of SARS-CoV-2, the virus that causes COVID-19.
The treatment had a strong quarter as it generated total sales of $3 billion in the quarter. During the quarter, the company fulfilled its second agreement with the U.S. government to manufacture and deliver 1.25 million doses of REGEN-COV.
This helped drive substantial growth for the company during the quarter. Earnings came in at $25.80 per share, up 260% year over year. Revenue surged 163% year over year. Even excluding REGEN-COV, sales rose 22% to $2.38 billion, driven by solid demand for Eylea and Dupixent.
REGN has an overall grade of B, translating into a Buy rating in our POWR Ratings system. The company has a Growth Grade of B, partly driven by growth in the recent quarter. Analysts forecast sales to rise another 28.8% year over year during the current quarter and 55.5% for the year. REGN also has a Value Grade of B due to its current valuation.
The stock has a trailing P/E of 11.98 and a forward P/E of 12.48; both are very attractive figures. Its price-to-sales ratio of 6.1 is also well below the industry average. If we consider analyst price targets, the stock is undervalued by as much as 24%. We also provide Momentum, Stability, Sentiment, and Quality grades for REGN, which you can find here.
REGN is ranked #11 in the Biotech industry. For more top stocks in this industry, click here.
REGN is just one of the stocks in my POWR Value portfolio. That's where I combine my many years of investing experience with the Top 10 Value Stocks strategy, which has +38.63% annual returns, to bring investors the best value stocks for today's market.
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REGN shares rose $0.08 (+0.01%) in after-hours trading Friday. Year-to-date, REGN has gained 37.30%, versus a 21.22% rise in the benchmark S&P 500 index during the same period.
Regeneron Pharmaceuticals, Inc. (REGN) is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.
About the Author: David Cohne
David Cohne has 20 years of experience as an investment analyst and writer. He is the Chief Value Strategist for StockNews.com and the editor of POWR Value newsletter. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers.
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