Over the past few years, we have witnessed several high-profile stock splits. Of course, these moves don't fundamentally change the value of a corporation. However, they can generate some buzz and renewed interest from investors, and allow people on a budget to acquire whole shares of companies with less money, as opposed to opting for fractional shares.
Companies sometimes institute stock splits when their shares become "too expensive." With that in mind, let's look at two companies that could go that route based on their share prices: Regeneron (REGN -0.84%) and Booking Holdings (BKNG 0.53%). The good thing is that, stock split or not, both companies look like excellent options for investors.
1. Regeneron
Regeneron became a publicly traded corporation in 1991. In that time, the company hasn't conducted a single stock split. However, with the biotech performing well, especially over the past couple of years, its stock price has become quite pricey. Regeneron's shares are changing hands for about $796 as of this writing -- that's a lot for a single share of a company.
Whether the company will institute a split is anyone's guess, but doing so could potentially attract more investors. Even if Regeneron opts not to, that's no reason to avoid the stock. Regeneron has performed well recently for a reason. The company's key growth drivers, Eylea, which treats an eye disease, and eczema therapy Dupixent are doing most of the work.
Recently, Regeneron earned approval for a high-dose formulation of Eylea, which should help it decrease the number of annual doses patients need. That will allow Regeneron to better compete with Roche's Abrysvo while extending the medicine's patent exclusivity. It is a win-win for Regeneron and Bayer, which co-markets Eylea.
Dupixent, developed in collaboration with Sanofi, also has attractive prospects. Its sales are growing rapidly, and it could soon earn a label expansion in treating COPD. Dupixent's total sales in the second quarter soared by 33% year over year to $2.79 billion. Despite some abnormalities due to its COVID-19 sales, Regeneron's revenue, earnings, and free cash flow have generally been on an upward path in the past five years.
REGN Revenue (Quarterly) data by YCharts
Beyond Eylea and Dupixent, the company's pipeline looks exciting. Regeneron features over 40 programs, some of which will lead to brand-new approvals, a larger lineup, and stronger revenue and earnings growth. So, stock split or not, Regeneron is a top biotech stock that deserves serious consideration from growth-oriented investors.
2. Booking Holdings
Booking Holdings is one of the largest online platforms that provides travel arrangements, including flights, accommodations, activities, car rentals, and more. The company has had one stock split before, but it was some 20 years ago, and it wasn't the kind we are interested in here.
In 2003, Booking Holdings performed a 1-for-6 reverse stock split. Companies often do this when their share prices have become too low -- as opposed to a regular stock split when stock prices get too high -- and they risk being kicked out of major indexes.
However, Booking Holdings' current share price is $2,835. At these levels, the company looks overdue for a stock split, especially as its business looks strong and it will likely continue to outperform the market, just as it has in recent years, even with the travel disruptions caused by the pandemic. In the second quarter, Booking Holdings' revenue of $5.5 billion increased by 27% year over year, while its net income of $1.3 billion soared by 51% compared to the year-ago period.
Further, Booking Holdings' gross travel bookings came in at $39.7 billion, a 15% increase compared to the second quarter of 2022. One of the strengths of Booking Holdings' business is the company's network effects, with travelers increasingly gravitating toward its services the more hotels, accommodations, and activities it offers -- and vice versa. While other companies in this business also benefit from the network effect, including Airbnb and Expedia, the larger Booking Holdings competes favorably with these smaller companies in key metrics.
BKNG Revenue (Quarterly) data by YCharts
Booking Holdings' ability to grow its revenue faster than competitors Airbnb and Expedia -- at least over the past year -- is impressive, considering its much higher top line. It points to how healthy Booking Holdings' operations are, and whether or not a stock split is forthcoming, the company's shares look highly attractive.
