On Thursday, Evercore ISI adjusted its outlook on Regeneron (NASDAQ:REGN) Pharmaceuticals (NASDAQ: REGN), reducing the stock's price target from $1,250.00 to $1,175.00, while still endorsing the stock with an Outperform rating. The revision comes in response to an anticipated earlier launch of a competing drug.
The company's shares have experienced a significant downturn, dropping approximately 18% since September 23, when it was first reported that Regeneron's request for a preliminary injunction in its Biologics Price Competition and Innovation Act (BPCIA) case against competitor Amgen (NASDAQ: NASDAQ:AMGN) was turned down. Following this, an appeals court also denied Regeneron's effort to block Amgen's biosimilar version of Eylea, known as aflibercept, and Amgen proceeded to announce the at-risk launch of Pavblu.
Evercore ISI's revised model anticipates a major hit to Regeneron's Eylea 2mg U.S. sales, with expectations of a slower uptake for the high-dose version of Eylea. Despite the setback, which is less favorable than the previously expected competition in 2026, the firm's investment thesis for Regeneron remains positive. The thesis is underpinned by the growth of Dupixent, which is believed to drive Regeneron's research and development well into the next decade, with Eylea continuing to be a significant, albeit declining, source of revenue.
The analyst acknowledged that the market reaction to the recent developments was understandable, especially given that Regeneron had been one of the best-performing U.S. large-cap biopharmaceutical stocks year-to-date, second only to Eli Lilly and Company (NYSE: NYSE:LLY). The current market sentiment is perceived as needing a fresh catalyst to shift the negative outlook following these events.
In other recent news, Regeneron Pharmaceuticals has reported a 12% increase in total revenues to $3.55 billion, with Dupixent global revenues surging by 29% to $3.56 billion. The company also announced a pre-tax charge of approximately $56 million for acquired in-process research and development related to collaboration and licensing agreements, expected to affect net income per diluted share by about $0.43 for the third quarter of 2024. Regeneron's drug Dupixent received approval for treating Chronic Obstructive Pulmonary Disease in the U.S. and China, a development that TD Cowen believes could represent a $2-3 billion opportunity.
However, Regeneron faces a legal challenge from Amgen over patents related to its product, Eylea. The Federal Circuit's decision, contrary to TD Cowen's expectations, may enable Amgen to launch a competing product. Despite this, TD Cowen has maintained a Buy rating for Regeneron, with a price target of $1,230.00. Wells Fargo, on the other hand, adjusted its financial outlook for Regeneron, reducing the price target on the company's shares to $1,050, while maintaining its Overweight rating. Truist Securities also revised its price target for the company to $1,137.00, but maintained a Buy rating.
In addition, Regeneron shared positive results from an extension study of the Phase 3 PHOTON trial, demonstrating that EYLEA HD maintained efficacy in patients with diabetic macular edema while allowing for significantly longer dosing intervals. These are some of the recent developments in Regeneron's ongoing business activities.
InvestingPro Insights
Despite the recent setback and market reaction, Regeneron Pharmaceuticals (NASDAQ: REGN) maintains several strengths according to InvestingPro data. The company's financial health appears robust, with liquid assets exceeding short-term obligations and cash flows sufficiently covering interest payments. This financial stability could provide a buffer as the company navigates the competitive challenges in its Eylea business.
InvestingPro Tips highlight that Regeneron operates with a moderate level of debt and has been profitable over the last twelve months. These factors align with the analyst's continued positive investment thesis, suggesting that the company has the financial foundation to support its ongoing research and development efforts, particularly for Dupixent.
Interestingly, management has been aggressively buying back shares, which could signal confidence in the company's long-term prospects despite the current headwinds. Additionally, the stock's RSI suggests it may be in oversold territory, potentially presenting a buying opportunity for investors who share Evercore ISI's optimistic long-term view on Regeneron.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Regeneron Pharmaceuticals, providing deeper insights into the company's financial health and market position.
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