Regeneron (REGN) Down 8.3% Since Earnings Report: Can It Rebound?
It has been more than a month since the last earnings report for Regeneron Pharmaceuticals, Inc. REGN. Shares have lost about 8.3% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is the stock due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Regeneron Beats on Earnings & Sales
Regeneron reported third-quarter of 2017 results wherein both earnings and sales beat expectations on the back of strong performance of eye-care drug Eylea.
The company reported earnings of $3.99 per share in the third-quarter beating the Zacks Consensus Estimate of $3.93 compared with $3.13 recorded in the year-ago quarter.
Total revenues in the second quarter increased 23% year over year to $1.5 billion driven by strong sales of Eylea. Revenues were above the Zacks Consensus Estimate of $1.46 billion.
Regeneron has co-developed Eylea with the HealthCare unit of Bayer. The company is solely responsible for the sales of the eye drug and is entitled to profits in the United States. However, it shares profits and losses equally with Bayer from ex-U.S. Eylea sales, except in Japan, where the company receives a royalty on net sales.
Quarterly Highlights
Net product sales increased to $957 million in the reported quarter, up 11.7% year over year. The majority of sales came from Eylea in the United States ($953 million, up 10.4%).
Revenues also include Sanofi and Bayer collaboration revenues of $482 million, compared with $336 million in the year-ago quarter. Collaboration revenues from Sanofi were $245.2 million in the quarter, compared with $144.4 million a year ago. Praluent recorded global net sales of $49 million in the reported quarter, up from $38 in the year-ago quarter. We note Praluent has been developed in collaboration with Sanofi. Product sales for Praluent are recorded by Sanofi, while Regeneron shares profits or losses from the commercialization of the drug.
Dupixent sales came in at $89 million. The drug was approved earlier in 2017 for the treatment of adults with moderate-to-severe atopic dermatitis.
R&D expenses decreased 2.5% while selling, general and administrative increased 13.6% during the quarter.
2017 Outlook
The company reaffirmed its sales guidance for Eylea. In 2017, Regeneron expects Eylea net sales to grow around 10% in the United States.
The company now expects adjusted unreimbursed R&D expenses in the range of $885-$915 million, down from the earlier guidance of $925-$965 million.
In May 2017, the FDA approved Kevzara for the treatment of adult patients with moderately to severely active rheumatoid arthritis who have an inadequate response or intolerance to one or more disease modifying anti-rheumatic drugs. The drug was also approved in Europe in June 2017.
Enrolment was completed in the phase III study, PANORAMA, evaluating Eylea in patients with non-proliferative diabetic retinopathy without diabetic macular edema.
The company also received a significant boost when the FDA approved Dupixent (dupilumab) injection for the treatment of adults with moderate-to-severe atopic dermatitis. The drug was also approved in Europe in September 2017.
A phase III study evaluating Praluent in homozygous familial hypercholesterolemia was initiated in fourth-quarter 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter compared to one lower.
Regeneron Pharmaceuticals, Inc. Price and Consensus
Regeneron Pharmaceuticals, Inc. Price and Consensus | Regeneron Pharmaceuticals, Inc. Quote
VGM Scores
At this time, Regeneron's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
While estimates have been broadly trending upward for the stock, the magnitude of these revisions has been net zero. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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