Should You Invest in Regeneron?

PHOTO CREDIT: Regeneron

OVERVIEW

Regeneron Pharmaceutical Incorporation is a biotech and pharmaceutical company that specializes in manufacturing drugs for diseases and viruses. It sells its products around the world and has licensing agreements with other drug manufacturers like Sanofi and Roche. The company was founded in 1988.

Why You Should?

  1. Many investors heard about Donald Trump’s COVID diagnosis and the aftermath of the event. According to Trump and his physicians, he took an experimental COVID antibody treatment to improve the outcome of the diagnosis. This saw the stock price skyrocket and if this is one of the first COVID cures, it will cause the stock price to rise further.
  2. Regeneron has a wide variety of drugs and medicines in its portfolio. Though it has focused its efforts on the COVID-19 Pandemic, they produce drugs to fight against age-related macular degeneration, asthma in adults and children, and many others. This strong portfolio of drugs will benefit the company’s sales and future growth.
  3. Regeneron has seen rising revenues and profits over the past couple of financial years due to the reasons mentioned above. This will help the company build a stronger balance sheet and will position them well for the future of the pharmaceutical industry. Because of this, they can make more drugs and further increase their sales. In the financial year of 2019, the company reported revenues of around 7.9 billion and profits of around 2.1 billion. In the financial year of 2018, the comapny reported revenues of around 6.7 billion and profits of 2.4 billion. Though the company reported marginally lower profits, it still has strong profits.
PHOTO CREDIT: Yahoo Finance

Why You Should Not?

  1. The COVID-19 Pandemic has also negatively impacted the company’s sales of other drugs as customers stay at home and miss regular hospital visits. This shift in consumer trends might continue until people are comfortable to go return to hospitals and take drugs produced by Regeneron.
  2. Regeneron faces tough competition from other drug manufacturers like Pfizer, Eli Lilly, Gilead, and many others. This competition might hurt Regeneron’s future stock price if it is unable to deliver a COVID treatment or vaccine before its competitors, it might cause the stock price to fall.
  3. The current political background does not bode well for companies like Regeneron as both political parties want to set price ceilings on certain drugs This might cause Regeneron’s top and bottom line to fall because they might make less money for each unit that they sell.
  4. Regeneron has seen its stock price skyrocket due to investor sentiments towards the COVID-19 treatments and vaccines. Trump taking a COVID treatment from Regeneron further increased the stock price. The stock currently trades near 600 dollars; I would wait for the stock price to fall considerably before investing in this company.

MY OPINION

In my opinion, I think that Regeneron is a great long term investment due to the wide variety of drugs that it offers hopes of a COVID treatment or vaccine. However, valuation and competition as well as a political background that wants to limit drug prices might hurt the company in the future.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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