Will Regeneron be worth more than Amazon by 2030?


Regarding the market value, Regeneron Pharmaceuticals (NASDAQ: REGN) may look like small potatoes compared to Amazon. The market capitalization of the biotech company is $ 61 billion. The e-commerce giant’s market capitalization exceeds $ 1.7 trillion.

Yet Regeneron is among the largest biotech companies in terms of market value. In a surprise gesture, the giants of the vaccine against the coronavirus Moderna and BioNTech slipped forward by this measure this year. But Regeneron’s story is far from over. And that can signal market value gains down the road.

But what gain are we talking about? Could Regeneron be worth more than a massive company like Amazon by 2030? Let’s find out.

Image source: Getty Images.

Antibody treatment against the coronavirus

Regeneron has been in the news lately with its coronavirus antibody treatment, REGEN-COV. The United States Food and Drug Administration (FDA) cleared the antibody cocktail late last year. And since then, the company has sold billions of dollars in doses. More recently, Regeneron signed a $ 2.9 billion deal with the United States for the delivery of 1.4 million additional doses through January. This follows two earlier orders of the US government.

Now the company is aiming for full approval of REGEN-COV. The FDA accepted the request for priority review and set an action date of April 13. Regeneron said the FDA plans to hold an advisory committee meeting earlier – so there is a possibility that a decision will be made before the target date. The submission covers the use of REGEN-COV in outpatients with mild to moderate coronavirus. And this also includes use as a prophylaxis in some people. The company plans to submit a request for inpatient use later in the year.

Antibody therapy is currently Regeneron’s biggest product. In the second quarter, it generated over $ 2.5 billion in sales. But that’s only part of the history of Regeneron. Regeneron sells seven other products in various processing areas. Its second most important product is Eylea, a treatment for age-related wet macular degeneration. The blockbuster generated more than $ 1.4 billion in revenue during the quarter.

Regeneron’s annual sales and net income have generally been increasing since 2014.

Graph showing the increase in revenue and net income of Regeneron since 2012.

REGN Income Data (Annual) by YCharts

And Regeneron’s return on investment has increased over the past year.

Graph showing the increase in return on invested capital of Regeneron since 2019.

REGN Return on the data of the invested capital by YCharts

37 candidates in the pipeline

Of course, that’s the picture right now. To imagine the market value of Regeneron in about 10 years, we’ll have to look at what might drive growth at that time. And that brings me to the pipeline. The company now has 37 candidates in the pipeline in areas such as oncology, eye disease, allergies and osteoarthritis pain, to name a few. It’s important to note that 22 of these programs are in Phase 2 or 3. If even a handful make it to commercialization, we might expect significant revenue growth down the road.

Now let’s look at the market value. Regeneron’s market value has climbed over 1000% over the past 10 years. To reach Amazon’s current market value, Regeneron’s market cap would need to increase by over 2,600% over the next nine years. The potential success of pipeline programs could generate significant gains. But it seems unlikely that the company’s market value will increase more than twice as much as in the past decade.

Of course, that doesn’t mean you should turn your back on this dynamic biotech stock. Today, product sales are growing. And the number of applicants in the pipeline makes me optimistic about future earnings. All of this should boost the performance of the stock price over time.

Speaking of price, you can buy Regeneron shares for a bargain right now. The stock only trades about nine times the estimated future earnings. So even if this biotech player doesn’t outperform Amazon in terms of market value, that’s okay. It still offers solid growth prospects for long-term investors.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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