Regeneron Pharmaceuticals (NASDAQ:REGN) is one of the premiere mid-sized biotechnology companies in the Pharmaceutical industry. REGN specializes in human antibody technologies having built a pipeline of antibody drug candidates targeting diseases ranging from cancer to rheumatoid arthritis and hypercholesterolemia.
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Regeneron's macular degeneration drug, Eyelea was approved by the FDA back in November of 2011. Wet age-related macular degeneration, a common cause of blindness in older people, affects more than 200,000 people every year.
The stock is one of the superior growth stocks of the last decade:
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Over the last ten years, the stock has returned an average of 41.4% per year. During the same period of time, the S&P 500 has delivered 5.7% per year.
Over the last three years, the stock has delivered a breathtaking 104% per year, while the market has delivered 9.1% per year.
Over the last twelve months Regeneron is up 71.9 percent, while the S&P 500 is up 15.1%.
When I compare the return of the stock against the more than 3,300 stocks that I rank daily, Regeneron receives a performance grade of "A+".
Regeneron has been on fire lately, the stock is up another 22.2% over the past month. It currently earns a momentum grade of "A".
As you can see, the stock has a very healthy stock chart right now. In fact, it recently broke out again to all-time highs.
What about valuation, however? Performance and momentum are great attributes for a stock to possess, but I have seen way to many "momentum" darlings blow up over the years, due mostly to astronomical valuations.
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REGN is currently trading at 34.4 times forward earnings, but it is expected to grow by 31.3% per year over the next five years! This makes for a PEG ratio of 1.1.
This is not exactly nosebleed type territory.
Next, I take next year's EPS estimate and extrapolate it out over the next five years at 31.3% per year. I then apply a multiple that I think is appropriate and come up with a five-year target price of $415.00.
This gives REGN upside potential of a whopping 97% over the next five years and a Gunderson Value grade of "A".
Now I have performance, momentum, and value-which can be a nice trifecta. In addition to this, the stock is in my number 1 ranked sector right now-biotech.
The biotech sector has been at or near the top of my sector ranking for over one year now.
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When I combine performance, value, and technicals, Regeneron is currently the top ranked stock in my system. Clients of Gunderson Capital Management are long the stock.
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Disclosure: I am long REGN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
