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Royalty Pharma (RPRX) Surges 5.4%: Is This an Indication of Further Gains?

Royalty Pharma (RPRX) witnessed a jump in share price last session on above-average trading volume. The latest trend in earnings estimate revisions for the stock doesn't suggest further strength down...

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This story originally appeared on Zacks

Royalty Pharma (RPRX) shares rallied 5.4% in the last trading session to close at $42.44. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 6.6% gain over the past four weeks.

- Zacks

Royalty Pharma stock witnessed a rise in share price for the third consecutive day. The company has provided an update on its business performance, including major recent accomplishments and 2021 guidance for net cash provided by operating and adjusted cash receipts. This probably led to the bullish investor sentiments.

Royalty Pharma anticipates net cash provided by operating activities to be in the range of $2,010-$2,030 million for 2021. Further, it now expects to deliver adjusted cash receipts at the high end of its guidance range of $2,110-$2,130 million for 2021, representing a rise of 18% year-over-year.

Further, Royalty Pharma is tracking well ahead of its target to deploy $7 billion in capital on new royalty transactions over five years ending 2025. In the last two years, it has already announced $5.5 billion worth of transactions through which 20 therapies have been added to its portfolio. In total, based on consensus sales forecasts, these investments are projected to add more than $750 million to the company’s annual adjusted cash receipts in 2025.

This company is expected to post quarterly earnings of $0.79 per share in its upcoming report, which represents a year-over-year change of +182.1%. Revenues are expected to be $543.05 million, down 5.1% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Royalty Pharma, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on RPRX going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>



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