Tuesday's IBD 50 Stocks To Watch pick, Regeneron, is forming a new base during the current stock market volatility, but remains below a key level.
Stocks To Watch: Regeneron
New York-based Regeneron is a biotechnology company that develops and sells medicines. It has more than 30 drugs in clinical development, including six already in the market for which it is testing additional uses.
In the most recent quarter — reported on Nov. 4, — the company crushed Wall Street's third-quarter forecasts. Regeneron earned $15.37 per share on sales of $3.45 billion, representing year-over-year increases of 84% and 51%, respectively.
Sales and earnings beat estimates, with revenue from notable products Eylea and Regen-Cov coming in above expectations. Eylea, a treatment for macular degeneration, accounted for 65% of Q3 product sales. Regen-Cov — an antibody cocktail for Covid-19 with emergency use authorization — sold $677 million in the quarter, or nearly 30% of sales.
"Turning to our business, we turned in another strong performance in the third quarter, which was marked by significant double-digit top and bottom line growth and continued operating leverage," Chief Executive Leonard Schleifer said in the earnings conference call.
"In R&D, our broad and growing pipeline, which now includes more than 30 clinical stage candidates with many more expected to enter the clinic in short order, continues to advance new innovations to secure our long-term growth potential. Importantly, our pipeline continues to be largely composed and comprised of internal innovation," Schleifer added.
Regeneron will report earnings on Feb. 4 before the market opens. The company is expected to earn $19.80 per share on revenue of about $4.45 billion, according to FactSet estimates.
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Regeneron's IBD Stock Ratings
Regeneron ranks No. 12 in the IBD 50. (The IBD 50 is a list of leading growth stocks with strong relative price strength and top-notch fundamentals.)
The stock shows a best-possible 99 Earnings Per Share Rating, and a perfect A SMR Rating, according to IBD Stock Checkup. The EPS Rating tracks a company's short- and long-term earnings performance. The SMR Rating analyzes a company's sales, margins and return on equity, and offers a letter grade from A (the best) to E (the worst).
IBD Stock Checkup also shows that REGN stock has a strong 95 out of 99 IBD Composite Rating.
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REGN Stock Eyes New Buy Point
REGN shares fell more than 2% midday Tuesday, and are squarely below their key 50-day moving average. Watch for the stock to climb back above that level as it continues to form a pattern.
During the current stock market correction, the stock is tracing a flat base with a 673.96 buy point, which has formed in the wake of a failed breakout past a 659.89 cup-with-handle entry, according to IBD MarketSmith chart analysis.
Positively, the stock's relative strength line is showing signs of strength and has risen sharply since early January. The RS line is just below a prior peak from mid-December. Particularly during stock market corrections, the RS line can clue you in quickly on a stock's leadership. The line measures the stock's price performance vs. the S&P 500.
Keep in mind that investors should mostly, if not entirely, be on the sidelines and in cash right now. Avoid making new purchases and prepare for the next stock market uptrend by building your watchlist with stocks that have strong relative strength lines and sound fundamentals.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the stock market.
