Rothschild Redburn Starts Regeneron Pharma (REGN) at Buy

Rothschild Redburn analyst Simon Baker initiates coverage on Regeneron Pharma (NASDAQ: REGN) with a Buy rating and a price target of $890.00.

The analyst comments: "As with all our companies, we use a combination of DCF- and NPV-based methodologies to value Regeneron (Fig 16). This gives an average fair value of $824, which we project forward at our 7.5% WACC to give a 12-month price target of $890, representing 60% upside potential from the current price.
Our valuation equates to a 2026E P/E and EV/EBITDA of 18.3x and 15.2x respectively, 39% and 45% premia to the sector, which we argue is justified by the sales and earnings growth over the coming years. Combined with a 0.7% dividend yield, however, the one-year TSR on offer is c61%. This leads us to launch coverage with a Buy recommendation.
Our DCF analysis gives a fair value of $718, representing 29% potential upside from current levels. We assume a WACC of 7.5% and a terminal growth rate of 1.5%. The NPV-based valuation creates a 30-year discounted cash flow model for each drug or non-drug asset by region. No terminal value is included for any drug: while a
company does have perpetual value, an individual drug does not, and after 30 years the cash flows should be close to zero. Adjusting for debt, provisions and associates gives Regeneron’s equity NPV fair value of $930/share, representing 67% potential upside."

For an analyst ratings summary and ratings history on Regeneron Pharma click here. For more ratings news on Regeneron Pharma click here.

Shares of Regeneron Pharma closed at $561.55 yesterday.

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