Saturday, May 10, 2014

Citi: Regeneron a Buy, Will Regenerate

You'd hardly know biotech Regeneron Pharmaceuticals (REGN) reported a mixed first quarter this morning. Although the stock is down now, shares popped earlier, trading up as much as 1.8% around 10:30 a.m. before simmering down.

For the period ended March 31, Regeneron reported earnings of $2.26 a share or $263 million, up from $1.78 or $201 million year-over-year. Revenue rose to $626 million compared to $440 million. Analysts polled by Thomson Reuters most recently forecast earnings of $2.20 a share, on sales of $610 million. The big downer: Disappointing sales of Regeneron’s eye treatment, Eylea.

Citigroup analyst Yaron Werber, however, calls the weak sales a temporary setback and considers weakness in Regeneron a buying opportunity. He explains why:

Eylea sales were a miss at $356 million versus our $409 million and Consensus $404 million, impacted by a decrease in distributor inventory and typically weak first quarter. Unit demand for Eylea grew by 25% year-over-year excluding inventory. The guidance was re-affirmed and we expect sales to bounce back in the second quarter and benefit from DME approval in the third quarter of 2014…This quarter was anticipated to be weak and any weakness in the stock provides an entry point ahead of a robust year of data for Alirocumab and dupilumab, ongoing strong ex-US launch of Eylea and expected approval in DME in the US by August 18th.

Shares of Regeneron have dropped 1.7% to $281.81 at 3:116 p.m. The iShares Nasdaq Biotechnology ETF (IBB) has fallen 2% to $222.94, while the SPDR S&P Biotech ETF (XBI) has slid 3.8% to $120.

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