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Investing.com - BofA Securities has raised its price target on Royalty Pharma (NASDAQ:RPRX) to $48.00 from $42.00 while maintaining a Buy rating following the company’s solid second-quarter results. The stock, currently trading near its 52-week high of $38, has delivered an impressive 50.6% return year-to-date. According to InvestingPro analysis, the company appears undervalued based on its Fair Value metrics.
The pharmaceutical royalty company reported portfolio receipts of $727 million for the quarter, exceeding BofA and consensus estimates by 7% and 6% respectively. The outperformance was largely attributed to stronger-than-expected results from mature products and novel launches including Rytelo and Skytrofa. With an exceptional gross profit margin of 99.04% and a conservative PEG ratio of 0.39, InvestingPro data reveals strong fundamental performance.
BofA’s price target increase reflects several positive factors including new royalty deals, cost savings from manager internalization, and increased forecasts for new royalty investments. The firm also noted that Royalty Pharma has initiated a dispute resolution with Vertex (NASDAQ:VRTX) regarding the royalty rate owed on Alyftrek, with Royalty Pharma seeking the full 8-9% rate versus the current 4%.
Royalty Pharma has updated its fiscal year 2025 guidance, raising it by 2% at the midpoint to reflect approximately 10.5% year-over-year growth. The company’s guidance incorporates conservative assumptions regarding cystic fibrosis royalties, Medicare Part D redesign, and previously flagged loss of exclusivity for products including Promacta and Tysabri.
BofA Securities maintains that Royalty Pharma’s core business remains solid with potential upside from future royalty assets, supporting the firm’s continued Buy rating on the stock. InvestingPro analysis supports this view, assigning the company a "GREAT" Financial Health Score of 3.34, with additional insights available in the comprehensive Pro Research Report.
In other recent news, Royalty Pharma reported a robust performance for the second quarter of 2025, showcasing significant growth in portfolio receipts. Despite a minor earnings miss, the company highlighted key financial metrics during its earnings call, indicating a promising outlook for the remainder of the year. Strategic collaborations were also emphasized as part of their future guidance, reflecting a positive sentiment among investors. The company’s strong performance was noted in premarket trading, although specific stock price movements were not detailed. Analyst firms have yet to provide updates on their ratings for Royalty Pharma following the earnings announcement. These developments are crucial for investors as they consider the company’s growth trajectory and strategic direction.
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