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On Tuesday, RBC Capital Markets reaffirmed their positive stance on Regeneron Pharmaceuticals, maintaining an Outperform rating and a price target of $943.00 for the (NASDAQ:REGN) shares. The firm’s analysis suggests that Regeneron is substantially undervalued based on a discounted cash flow (DCF) approach. This aligns with InvestingPro analysis, which indicates the stock is currently undervalued, trading at an attractive P/E ratio of 14.1x and a PEG ratio of 0.84, suggesting good value relative to growth prospects. The valuation disconnect is attributed to the market’s fixation on the declining Eylea franchise and its failure to fully appreciate the potential of Dupixent and other pipeline assets.
RBC Capital Markets addressed concerns about Eylea, a key product for Regeneron, by proposing a hypothetical scenario where the company could divest the worldwide rights to its partner Bayer (OTC:BAYRY) (BAY). In this scenario, without Eylea’s contribution to earnings, Regeneron’s estimated earnings per share (EPS) for 2027 and compound annual growth rate (CAGR) would stand at $35.81 and 18%, respectively. The company’s strong financial position is evident in its GREAT Financial Health Score from InvestingPro, with more cash than debt on its balance sheet and robust current ratio of 4.93x. According to RBC Capital’s analysis, if Regeneron were valued similarly to its high-growth peers without Eylea, its shares could trade at $843, which would be over $200 or 43% higher than current levels.
The firm clarified that this is merely a thought experiment and not an actual expectation or recommendation for Regeneron to spin off Eylea. However, they believe that the exercise supports the argument that Regeneron’s stock should trade significantly higher once the market moves past the Eylea concerns and starts recognizing the company’s growth drivers.
RBC Capital’s commentary underscores the reduced market expectations for Eylea, which have fallen from projections of more than $5 billion a few months ago to $3.3 billion. This adjustment is seen as a step towards improving the stock’s perceived investability.
In conclusion, RBC Capital Markets strongly advocates for continued investment in Regeneron, suggesting that the current market valuation does not fully reflect the company’s growth prospects. They encourage investors to remain buyers of Regeneron’s stock, anticipating a meaningful appreciation in value as the market shifts its focus towards the company’s broader portfolio and future growth potential. With a market capitalization of $62.2 billion and analyst consensus remaining bullish, the stock shows promising potential. For deeper insights into Regeneron’s valuation and growth prospects, investors can access comprehensive analysis and 8 additional ProTips through InvestingPro’s detailed research report.
In other recent news, Regeneron Pharmaceuticals has been at the forefront of several notable developments. The company has successfully acquired the assets of 23andMe for $256 million in a bankruptcy auction, which is anticipated to enhance its genetics-guided research and drug development capabilities. This acquisition is still subject to bankruptcy court and regulatory approvals, with an expected closure in the third quarter of 2025. Regeneron also won a significant antitrust lawsuit against Amgen (NASDAQ:AMGN), resulting in a $406.8 million award in damages due to Amgen’s unfair sales practices concerning cholesterol medications. In another development, Citi analyst Geoff Meacham upgraded Regeneron’s stock rating from Neutral to Buy, increasing the price target to $700, citing strong pipeline potential in areas like melanoma and chronic obstructive pulmonary disease.
Additionally, Regeneron is preparing to present new cancer treatment data at the 2025 American Society of Clinical Oncology Annual Meeting, focusing on various cancers including skin and lung cancers, lymphoma, and multiple myeloma. The presentations will feature results from trials involving Libtayo and linvoseltamab, among others. These efforts underscore Regeneron’s commitment to advancing oncology and hematology treatments. Meanwhile, the company’s ongoing relationship with OraSure Technologies is expected to remain stable following Regeneron’s acquisition of 23andMe, as highlighted by Evercore ISI analyst Vijay Kumar. These developments collectively reflect Regeneron’s strategic initiatives and ongoing research advancements in the biotechnology sector.
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