Regeneron Stock Jumps After Analyst Says Now Could Be a Good Time to Buy

“We believe Regeneron is well positioned heading into 2021 and see current levels as an attractive entry point,” Luchini wrote in a note out Monday.

Luchini upgraded the stock to Outperform from Market Perform and maintained his previous target price of $630. The stock closed Friday at $537.79.

Shares of Regeneron (ticker: REGN) were up 3.6% in premarket trading on Monday.

In his note, Luchini said that, despite challenges, the company’s eye medication Eylea still has “room to grow,” and its skin drug Dupixent has “plenty of room to grow.” He also highlighted the company’s cancer drug pipeline.

“Given our positive view on Regeneron’s fundamentals and optionality provided by the pipeline we believe current levels provide an attractive entry point,” he wrote.

Regeneron shares are up 58.4% over the past 12 months. The stock trades at 13.8 times earnings expected over the next 12 months, according to FactSet, below its 5-year average of 20.9 times earnings. Of the 26 analysts tracked by FactSet who cover the stock, 18 rate it a Buy or Overweight, and eight rate it a Hold.

Much of the volatility in the stock over the past 12 months is due to the excitement over the company’s Covid-19 antibody therapy, which the Food and Drug Administration authorized for emergency use in November. Earlier this month, Regeneron signed a deal worth up to $2.6 billion for as many as 1.25 million doses of the therapy.

Analysts have argued at various points over the course of this month that the Regeneron selloff that took place in the second half of 2020 was overdone. In a note on Jan. 8, Citi Research analyst Mohit Bansal argued that investors were underestimating the potential of Dupixent, and were overly concerned about the risk to Eylea sales.

Luchini made similar points in his note published on Monday. He acknowledged risks to Eylea’s pricing and from competition. But he said that there was “still room to grow driven by market expansion and share gains.”

As for Dupixent, he said there was still “ample room for growth,” and the potential for the drug to be approved to treat a broader range of conditions.

Luchini said that the Covid-19 antibody was not central to his thesis, but that it could offer short-term profit.

“Monoclonal antibody usage has been slow, even during the continuing surge,” he wrote. “Given our expectation that the broader focus remains on expanding vaccine distribution we expect demand to meaningfully decline as we move through 2H21.”

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com