Will Regeneron Earnings Grow Fast Enough for Investors?

Regeneron Pharmaceuticals (NASDAQ: REGN  ) will release its quarterly report on Tuesday, and the company's stock has been on an absolute tear over the past year. Yet with such an aggressive valuation, Regeneron earnings will eventually have to provide the growth to back up what has become a massive earnings multiple for the shares.

Regeneron's success has come largely from its Eylea medication for age-related macular degeneration and macular edema, which has seen sales soar. But the company will need further prospects to pan out in order to produce the growth that investors seem to foresee from Regeneron's pipeline. Let's take an early look at what's been happening with Regeneron over the past quarter and what we're likely to see in its quarterly report.

Stats on Regeneron

Analyst EPS Estimate

$0.87

Change From Year-Ago EPS

24%

Revenue Estimate

$473.23 million

Change From Year-Ago Revenue

56%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

How fast can Regeneron earnings grow?
Disturbingly, analysts have reined in their estimates on the pace of growth in Regeneron earnings in recent months, cutting June-quarter estimates by 20% and reducing full-year 2013 calls by $0.64 per share. The stock, though, has continued to power ahead, with gains of 25% since late April.

Nearly all of Regeneron's share-price gains came right after the company announced its first-quarter results. The company saw sales boom 90% higher, with sales of Eylea representing almost all of its net product revenue for the quarter. Investors were pleased when the company boosted its 2013 sales guidance for the drug to a range of $1.25 billion to $1.33 billion, roughly $30 million to $50 million higher than previous projections.

Regeneron also gained from the woes of rival Allergan (NYSE: AGN  ) , which announced negative results from its stage 2 trial of its DARPin vision-loss drug. The announcement sent Allergan shares sinking as the results effectively ended DARPin's potential to compete against Eylea, further cementing the drug's blockbuster status in the macular degeneration area.

Eylea isn't Regeneron's only prospect, though. The company's partnership with Sanofi (NYSE: SNY  ) produced positive results from a phase 2a study of a jointly developed asthma drug in May, and the companies have also started late-stage trials of its sarilumab treatment for rheumatoid arthritis.

Still, most of the attention on Regeneron will continue to center on Eylea for the foreseeable future. Just last week, the European Committee for Medicinal Products for Human Use recommended Eylea for approval as a macular edema treatment, further broadening the drug's potential market.

In the Regeneron earnings report, watch to see if the company provides further upside guidance for Eylea sales. In combination with more good news from its other drug partnerships, an Eylea upgrade is what investors want to see in order to justify further share-price gains from here.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 03, 2013, at 6:11 AM, Chris1403 wrote:

    It is hard to believe how so bulish stock recommended by TheStreet as a buy dropped over 2% and what is ridiculous, it happened during the session where NASDAQ went up 0.38%. Moreover, this happened when REGN is just before reporting its Q2 results which are very likely to be excellent. I believe that someone was forced to sell it because of earlier obligations and did it in small portions.

  • Report this Comment On August 05, 2013, at 3:17 PM, Chris1403 wrote:

    As I see some investors became very impatient and gave so easily so good stock. See you tomorrow at 10% jump up on REGN.

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