What happened
Shares in bioprocessing equipment company Repligen (RGEN -2.00%) soared by more than 14% this week by late Thursday. The move comes after an excellent set of second-quarter earnings released on Tuesday. The results were ahead of expectations, and management increased its full-year revenue and earnings guidance.
Having started the year forecasting full-year organic growth of 18% to 22%, management lowered expectations at the end of April to a range of 14% to 18% and raised them again on Tuesday to 19% to 22%.
So what
The reason for the variation in the guidance comes down to a combination of uncertainty regarding spending on COVID-19-related vaccines and therapies, and difficulty in reading the strength of the (non-COVID-related) monoclonal antibody market.
Repligen's COVID-related revenue outlook has dimmed as the year has progressed, but it's been more than offset by surging investment in monoclonal antibody therapies.
The company defines its organic, non-COVID-related revenue as its "base business." The guidance for the base business has trended up all year, starting from 20% to 22%, then 24% to 31% in April, and now to 31% to 33%.
It's a view supported recently by Repligen's peer, Danaher (DHR -1.07%), which believes an explosion in investment in monoclonal antibody research supports its relevant revenue to grow by more than 20% in 2022. And that growth will be "probably above the low-double-digits that we have seen historically" in 2023 as well, according to Danaher CEO Rainer Blair.
Now what
If what Danaher's management says about its bioprocessing revenue also applies to Repligen, then the latter is set for another very strong year in 2023, even as COVID-related revenue slows. It's something to look for in an exciting growth industry.
