"Management thinks Eylea can bring in $140 million to $160 million in sales this year, although I'd guess that's a conservative estimate and they're hoping for more."
Oh, what a difference a month makes.
"This year's sales aren't enough to justify Regeneron's $7 billion market cap on their own."
Yup, me again.
Regneneron's market cap is up to $10.5 billion now. That's great for investors that have held shares over the last month. And it's not too surprising considering the recent lackluster launches of Dendreon's
But Regeneron has entered the be-careful valuation range. A price to sales ratio of 35 at the high end of guidance is a bit pricey. Technically, it's come down from the 43-plus when the original guidance was released, but as I said last month, that looked pretty conservative.
Of course, the ultimate valuation -- and therefore the ultimate returns for long-term investors -- won't be based on the sales this year or even the ramp up over the next few years, but rather the peak sales that Eylea and its pipeline can achieve. I'm not convinced Regeneron deserves the nearly 50% increase it has experienced over the last month because I'm not convinced the new sales info really changes the peak sales potential.
Sales guidance could double again next month, but I wouldn't count on it. I've made an underperform CAPScall on the stock. It's not a knock on Eylea or the rest of the pipeline, but I think there's probably better places to put your money while Regeneron grows into its new, larger britches.
Fool analysts think they've found another health-care company with just as much growth potential as Regeneron. You can read about it in their new free report: "Discover the Next Rule-Breaking Multibagger." Get your copy for free by clicking here.