Why Regeneron's Growth Opportunity Is Unappreciated

Regeneron Pharmaceuticals Inc REGN shares were advancing Monday following a sell-side upgrade and the news of President Donald Trump being administered its investigational COVID-19 antibody cocktail. 

The Regeneron Analyst: Cantor Fitzgerald analyst Alethia Young upgraded Regeneron shares from Neutral to Overweight and increased the price target from $624 to $690.

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The Regeneron Thesis: Regeneron shares have outperformed the broader biotech sector thanks to greater appreciation of its growth profile and a notable setback for Novartis AG's NVS wet AMD treatment Beovu in the real world, Young said in a Sunday upgrade note.

The outperformance does not reflect the allergic disease drug Dupixent's prospects as a near- and long-term growth driver, the analyst said.

Cantor estimates worldwide Dupixent sales of $6.3 billion in 2021, ahead of the $5.2-billion consensus estimate.

Expansion opportunities for Dupixent in younger patients, different indications and broader geographies should also drive commercial growth in the coming years, Young said.

With antibodies expected to emerge as an important treatment and prevention option for COVID-19, Regeneron's antibody cocktail REGN-COV2 is another unappreciated near-term revenue driver in 2021, the analyst said. The regulatory path for the antibody cocktail is uncertain, she said. 

Regeneron's oncology strategy is shaping up well, with solid monotherapy PD-1 data in non-small cell lung cancer that sets the stage for future combination work that could drive mid- to long-term growth, according to Cantor Fitzgerald. 

REGN Price Target: At last check, Regeneron shares were rallying 7.11% to $604.98.

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