On Wednesday, Jefferies adjusted its outlook on Repligen (NASDAQ:RGEN), a bioprocessing company, reducing the stock price target to $170 from $180 while keeping a Hold rating on the stock. The firm cited a "mixed bag" for the first quarter of 2024, with revenues surpassing expectations but earnings per share falling short. Moreover, the company's full-year 2024 guidance was reiterated.
Repligen's business-to-business (B2B) ratio was reported at 0.99x, a slight decrease from the ratio of greater than 1x observed in the second half of 2023. The company experienced robust growth in consumable products, which saw an increase of over 10% quarter-over-quarter. However, this was counterbalanced by weaker equipment trends, estimated to be in the double-digit decline range.
The analyst highlighted the continued success of new bioprocessing modalities, which account for approximately 20% of Repligen's business mix. These modalities demonstrated a notable year-over-year growth of 16%, and they are expected to be a potential area of upside as the year progresses.
Despite these factors, valuation concerns were noted as the primary reservation, with the company's stock trading at approximately 12 times revenues and 50 times the projected 2025 EBITDA. The firm suggests that if Repligen sees order improvements in the second half of the year and gains confidence in a return to more normal levels in 2025, current valuation concerns might become less relevant.
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