REGN Stock Undervalued At $500?

Forbes

3 days ago

Regeneron Pharmaceuticals (NASDAQ:REGN) shares witnessed a notable 19% decline on Friday, May 30, in the wake of the unexpected failure of itepekimab, its chronic obstructive pulmonary disease (COPD) treatment in conjunction with Sanofi, during a late-stage clinical trial. One of the two trials did not achieve its primary endpoint, which is a significant setback considering that itepekimab was anticipated to become a blockbuster drug, with peak sales projections from Sanofi estimated between $2 billion and $6 billion.
This recent occurrence has intensified the existing pressures on REGN stock. At present, trading at $490, the stock has decreased 60% from its 52-week peak of about $1,200. A large portion of this downturn can be ascribed to the company's less-than-expected performance, especially concerning its existing blockbuster treatment, Eylea. To add to Regeneron's challenges, the U.S. Food and Drug Administration (FDA) recently rejected a pre-filled syringe variant of Eylea HD, citing problems with a third-party supplier.
In light of the significant drop in Regeneron's stock price, a natural question emerges: is REGN now a viable buying opportunity? From a valuation standpoint, the stock seems undervalued, indicating an attractive entry point for investors. We believe there is little reason for long-term concern with REGN stock, rendering its current valuation notably low.
Our conclusion is derived from a thorough analysis that compares REGN's current valuation with its recent operating performance and historical financial health. Our evaluation of Regeneron Pharmaceuticals across essential parameters—Growth, Profitability, Financial Stability, and Downturn Resilience—suggests that the company continues to exhibit a very strong operational performance and financial condition, as elaborated further below. Nevertheless, for investors seeking lower volatility than that of individual stocks, the Trefis High Quality portfolio offers an alternative — having outperformed the S&P 500 and delivered returns exceeding 91% since its inception. Additionally, see – Buy, Sell, or Hold HIMS Stock?
When considering the cost per dollar of sales or profit, REGN stock appears slightly undervalued compared to the broader market.
Regeneron Pharmaceuticals' Revenues have seen a slight decline over recent years.
Regeneron Pharmaceuticals' profit margins are significantly higher than those of most companies in the Trefis coverage universe.
Regeneron Pharmaceuticals' balance sheet appears very robust.
REGN stock has experienced an impact that was slightly better than the benchmark S&P 500 index during various recent downturns. Concerned about the influence of a market crash on REGN stock? Our dashboard – How Low Can Regeneron Pharmaceuticals Stock Go In A Market Crash? – includes a comprehensive analysis of the stock's performance during and after past market crashes.
In conclusion, Regeneron Pharmaceuticals' performance across the mentioned parameters is summarized as follows:
Regeneron has demonstrated strong performance across crucial financial metrics, and we contend this is not fully captured in its current stock valuation, which renders it an attractive investment. This substantiates our assertion that REGN is a stock worth buying. The recent clinical trial setback for itepekimab will most likely postpone its launch, as the drug will require further trials. Nevertheless, Regeneron stands to gain significantly from the strong growth of Dupixent, a drug created in partnership with Sanofi. Dupixent's sales rose 19% to $3.7 billion last quarter, with potential peak annual sales surpassing $20 billion. Furthermore, Regeneron has a promising pipeline with over a dozen programs currently in late-stage trials, suggesting future growth opportunities.
Even though a setback in a clinical trial and declining Eylea sales may logically lead to a compression in valuation multiples, we believe the selling pressure on REGN stock at values below $500 is excessive. We think investors can exploit this current dip as a buying chance for strong long-term gains. Nevertheless, prior to making any investment choices, it's critical to consider the associated risks. Any adverse outcomes from ongoing clinical trials, particularly related to its COPD treatment, could result in further declines in the stock. Moreover, during periods of broader market downturns stemming from macroeconomic uncertainties, REGN stock could also decrease. Although Regeneron has historically outperformed the broader market during certain recent corrections, it remains susceptible to sharp declines. Separately, see – Plug Power's Hydrogen Hopes Dashed?
While REGN stock appears promising, investing in a single stock can present risks. Conversely, the Trefis High Quality (HQ) Portfolio, consisting of 30 stocks, has a history of consistently outperforming the S&P 500 over the past 4 years. Why is that? Collectively, HQ Portfolio stocks have delivered better returns with less risk compared to the benchmark index; presenting less volatility, as demonstrated in HQ Portfolio performance metrics.