Shares of Repligen (NASDAQ:RGEN) lost over 13% today, although there doesn't appear to be any company-specific news dragging the stock down. This simply appears to be good old-fashioned volatility caused by the stock's own success. Shares had posted a year-to-date gain of over 75% before today, and they're still up 54% since the beginning of the year after today's drop.
Investors have grown excited about the company's growth trajectory following solid first-half 2019 operating results and a major acquisition. Repligen even exited June with $209 million and appears to have at least doubled that total in the months since, suggesting it could still make another acquisition if the opportunity arises.
That said, shares are pretty expensive based on traditional stock metrics, which could explain the random sell off. As of 1:52 p.m. EDT, the stock had settled to an 11% loss.
Repligen develops bioprocess equipment and consumables that help customers safely and efficiently manufacture biologic drugs. Business is booming thanks to the global rise of biopharmaceuticals: First-half 2019 revenue soared 42% from the year-ago period to $131 million, while operating income jumped 117% to $22 million in that span.
Despite the progress, shares of Repligen certainly trade at a premium. The stock trades at 75 times future earnings and 18 times sales. The business has managed to grow into its expensive valuations over the years, but it's not surprising investors have second thoughts from time to time.
Assuming there really isn't any devastating news driving shares lower, investors with a long-term mindset shouldn't think anything of today's drop. Repligen has been a great growth stock, as evidenced by its five-year return of 319%. Management has demonstrated a knack for staying one step ahead of the fast-moving current of the biopharma market and developing or acquiring products to better serve customers. Therefore, investors should view this simply for what it is: volatility.