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Regeneron Pharmaceuticals (REGN - Free Report) is a biotechnology company focused on the discovery, development and commercialization of treatments targeting serious medical conditions. The company boasts a number of market-leading drugs including Eylea for several eye diseases, and Dupixent for asthma.
Eylea in particular has been an important growth driver for the company as demographic trends in the US and abroad have led to impressive adoption of the drug.
Additionally, a new drug combination that the company is introducing to improve the treatment of obesity, which compliments the exceptionally performing GLP-1 drugs could lead to another major growth catalyst. As the company attaches itself to this new mega-trend, it may ride to coattails of a secular shift in healthcare.
Furthermore, in what has been a somewhat challenging opening few weeks for the broader stock market, the healthcare sector has shown encouraging relative strength, further improving the odds of near-term strength.
These catalysts, along with a Zacks Rank #1 (Strong Buy) rating make Regeneron Pharmaceutical a compelling investment consideration.
Relative Strength in Healthcare
Although we are just two weeks into the year the healthcare sector has outperformed the broad market and all other sectors by a notable margin. The Healthcare ETF (XLV - Free Report) is up 2.6% YTD vs the S&P 500 ETF (SPY - Free Report) (-0.17%).
Additionally, something I have noted in my other publications on Zacks, is the increased uncertainty around the beginning of US presidential election years. The first quarter often shows elevated volatility; however, the healthcare industry has consistently shown defensive capacity in those situations. So, in the case of market weakness, we should see this sector holds up better than the others.
Image Source: Koyfin
Complimenting GLP-1 Obesity Drugs
The introduction of GLP-1 therapeutics, which are semaglutides traditionally used for treatment of diabetes, have flipped the medical industry on its head. After realizing that these can be used for treatment of obesity and induce rapid weight loss, drug manufacturers like Eli Lilly (LLY - Free Report) and Novo Nordisk(NVO - Free Report) were quick to release a product.
Ozempic and WeGovy have exploded in use and popularity as their effectiveness for weight loss has become undeniable. However, recent studies have shown that while users can rapidly cut fat, they may also lose significant muscle in the process.
But Regeneron may have a solution to this growing problem. A new drug currently under review may offer the possibility of addressing the loss of muscle mass, making it a logical pair in the treatment plan.
If this is the case, the new drug may attach Regeneron to this super trend, which has already sent Eli Lilly and Novo Nordisk rocketing higher over the last year.
Image Source: TradingView
Earnings Estimates
These developments have not gone unnoticed, and earnings estimates have been getting upgraded over the last two months. FY23 earnings have been revised higher by 1.3% and FY24 by 5.8%. Sales for the current year are expected to grow 6.5% to $12.96 billion and 5.2% next year to $13.63 billion.
Additionally, Regeneron is trading at a one-year forward earnings multiple of 24x, which is well below the industry average 96.6x, and just above its 10-year median of 22.5x.
Image Source: Zacks Investment Research
Bottom Line
As Regeneron pushes to new all-time highs, this momentum is likely to continue as these bullish factors carry it higher. For investors interested in adding exposure to healthcare or defensive oriented-stocks, REGN is worth looking at.
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Bull of the Day: Regeneron Pharmaceuticals (REGN)
Regeneron Pharmaceuticals (REGN - Free Report) is a biotechnology company focused on the discovery, development and commercialization of treatments targeting serious medical conditions. The company boasts a number of market-leading drugs including Eylea for several eye diseases, and Dupixent for asthma.
Eylea in particular has been an important growth driver for the company as demographic trends in the US and abroad have led to impressive adoption of the drug.
Additionally, a new drug combination that the company is introducing to improve the treatment of obesity, which compliments the exceptionally performing GLP-1 drugs could lead to another major growth catalyst. As the company attaches itself to this new mega-trend, it may ride to coattails of a secular shift in healthcare.
Furthermore, in what has been a somewhat challenging opening few weeks for the broader stock market, the healthcare sector has shown encouraging relative strength, further improving the odds of near-term strength.
These catalysts, along with a Zacks Rank #1 (Strong Buy) rating make Regeneron Pharmaceutical a compelling investment consideration.
Relative Strength in Healthcare
Although we are just two weeks into the year the healthcare sector has outperformed the broad market and all other sectors by a notable margin. The Healthcare ETF (XLV - Free Report) is up 2.6% YTD vs the S&P 500 ETF (SPY - Free Report) (-0.17%).
Additionally, something I have noted in my other publications on Zacks, is the increased uncertainty around the beginning of US presidential election years. The first quarter often shows elevated volatility; however, the healthcare industry has consistently shown defensive capacity in those situations. So, in the case of market weakness, we should see this sector holds up better than the others.
Image Source: Koyfin
Complimenting GLP-1 Obesity Drugs
The introduction of GLP-1 therapeutics, which are semaglutides traditionally used for treatment of diabetes, have flipped the medical industry on its head. After realizing that these can be used for treatment of obesity and induce rapid weight loss, drug manufacturers like Eli Lilly (LLY - Free Report) and Novo Nordisk (NVO - Free Report) were quick to release a product.
Ozempic and WeGovy have exploded in use and popularity as their effectiveness for weight loss has become undeniable. However, recent studies have shown that while users can rapidly cut fat, they may also lose significant muscle in the process.
But Regeneron may have a solution to this growing problem. A new drug currently under review may offer the possibility of addressing the loss of muscle mass, making it a logical pair in the treatment plan.
If this is the case, the new drug may attach Regeneron to this super trend, which has already sent Eli Lilly and Novo Nordisk rocketing higher over the last year.
Image Source: TradingView
Earnings Estimates
These developments have not gone unnoticed, and earnings estimates have been getting upgraded over the last two months. FY23 earnings have been revised higher by 1.3% and FY24 by 5.8%. Sales for the current year are expected to grow 6.5% to $12.96 billion and 5.2% next year to $13.63 billion.
Additionally, Regeneron is trading at a one-year forward earnings multiple of 24x, which is well below the industry average 96.6x, and just above its 10-year median of 22.5x.
Image Source: Zacks Investment Research
Bottom Line
As Regeneron pushes to new all-time highs, this momentum is likely to continue as these bullish factors carry it higher. For investors interested in adding exposure to healthcare or defensive oriented-stocks, REGN is worth looking at.