Regeneron Pharmaceuticals (REGN) is "significantly undervalued" because the market remains overly focused on Eylea's sales erosion and struggles to appreciate the full value of the company's pipeline and Dupixent, RBC Capital Markets said in a note on Tuesday.
The firm said that even without Eylea, it expects Regeneron to have a fundamental floor valuation of $550 per share based on Dupixent, other commercial assets and cash, which is not reflected in current stock levels.
"Pulling out Eylea and related expenses unmasks the high leverage the company has to grow earnings in the medium term through Dupi expansion, pipeline, and the Sanofi (SNY) development expense payoff," RBC said.
The firm estimates Regeneron's ex-Eylea fair value to range between $716 and $1,289 per share and said pipeline readouts in the second half and beyond are expected to shift focus away from Eylea.
RBC has an outperform rating on Regeneron's stock with a price target of $943.
Price: 599.72, Change: +11.38, Percent Change: +1.93
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