Shares of Repligen (RGEN -1.54%) fell more than 17% last month, according to data provided by S&P Global Market Intelligence. In fact, September was the stock's worst month of 2019, although there wasn't any company-specific news to justify the drop. This simply appears to be a case of investors taking some gains off the table for a company trading at a healthy premium.
For instance, even when accounting for September's tumble, shares of Repligen have gained 45% since the beginning of the year. The $3.9 billion company trades at 71 times future estimated earnings, 17 times sales, and four times book value. That's been the case for much of the last five years or so, but the bioprocess leader has always managed to grow into its premium valuation. Can that continue?
Repligen has relied heavily on acquisitions to fuel its rise in the last decade. The latest was also one of the largest, if not the largest: the $240 million acquisition of C Technologies. The deal gives Repligen a new technology platform for measuring the concentration of proteins in biopharmaceutical manufacturing and immediately establishes the company as a force in the high-growth, high-margin process analytics segment.
That said, it will take time and money to integrate C Technologies. Repligen tweaked its full-year 2019 guidance to reflect higher operating expenses than previously expected in the second half of the year, primarily due to the acquisition. Investors didn't mind at the time. Revenue for the year is still expected to grow 37% year over year at the midpoint. But many stocks trading at a premium valuation saw their prices fall last month -- and not even the company's strong growth profile could overcome that.
While shares had a bad month in September, nothing has changed for the business. It still has numerous opportunities for growth in the budding bioprocess engineering space. It's armed with a record amount of cash after completing multiple fundraising transactions partly used to acquire C Technologies. Simply put, investors with a long-term mind-set shouldn't be worried.