On Nov. 15 you said"slow and steady"..."Nothing happening before late 2014 or early 2015"...Stock was 142 then...Is this your definition of slow and steady? I said this was the next Genentech...And it will be, with nice upside in the short term, next month or two...GLTA!
On December 8, 2012 (the day of your post and comment that REGN had "nice upside int he short term, next month or two) REGN stock was at $180.87. Today the stock sits down at $174 or so. Do you still think I was wrong on my call. Anyone who follows this board knows I'm long REGN and have been for many years. I will say it again, other than CELG, I believe REGN's pipeline is the best in the biopharma business. With that said, I felt that REGN during Q4 of 2012 had started to hit resistance and had gotten ahead of itself. Hence, my reason for selling call options at a high volatility to pick up the premium. I continue to think REGN is an excellent company (see below for my EPS estimates -- I'm ahead of the street but the street has been chasing the upward trend all year) but needed to take a 3 - 6 month break (starting in Q4 2012) to build a base in the $165 to $185 range. There aren't a lot of near term catalysts (some European and other country approvals but nothing that is unexpected or will significantly drive the stock higher) to stimulate the stock at this point. It's a good time to sell volatility and pick up the premium to improve your 2013 return.
Check all my prior posts. I recommended this stock more than 5 years ago below $20!!!! I have been long the entire time. My comment about "slow and steady" really relates to individual investors that are trying to time the market. The story is a long term R&D and commercialization story. The company has a strong balance sheet and the cash flows are going to accelerate greatly over the next 3 - 5 years.
If you read all my posts for the last 5-years you would know that I'm a big believer in the REGN story. I just don't think individual investors should become short term traders. I've been in REGN for many years and have built a significant position over that time. I've been very consistent since my first buy that REGN had the best biopharma pipeline of any company except for maybe CELG. I also said the balance sheet continues to get strong and the cash flows will be significant over the next 5 to 10 years. 2012 has been an awesome year going from around $54 to around $185. 2013 and 2014 is setting up really nicely with a significant bump coming for various international launches. Late 2014 will bring the LDL lowering results that could reinvigorate the growth significantly. I also have given my estimates for EPS over the next few years. These numbers are above the street but I expect the analyst to slowly catch up to them. They have been chasing themselves throughout the year. When Eylea was launched in late November 2011 I posted that REGN would deliver $650 MILLION + sales in 2012. This number was materially above the company's guidance of $100 million and well above the street. I actually was low by $150 million but still way ahead of the initial estimates that were thrown out by the street through the first 9-months of 2012. Here are my EPS for the next few years so you can see if I know what I'm talking about:
2013 $5 per share
2014 $8 per share
2015 $10.50 per share
2016 $14 per share
I expect REGN to start to hit some real resistance up in the $225 - $240 range next year which would represent a PE based on 2014 EPS of around 30x. I do believe that if REGN was to hit the above earnings over the next 4 years you could see the stock in the $400 range by the end of 2016. That would be a 21.5% compounded return from the current level. That is what I'm playing for. If the stock would only hit $300 in that time period I would be extremely happy (13% compounded return for 4-years). By the way, I do expect it to be higher than $300.
I'm long and will stay that way for the foreseeable future. I will take advantage of any drop in the stock price (usually in the 15 - 20% range) by selling out of the money Put option volatility. When the stock runs straight up (usually in the 35% range) like it has from the $140 level I usually look to sell out of the money Call option volatility. This means I will probably look to sell some short term volatility if and when the stock hit about $190 over the next 30 days. This strategy has worked extremely well over the last 5-years and I've been able to pull in significant option premium. I did get called away on a small piece of my position early in the year when the stock had run from $54 straight up to move than $110 without taking a break. I had sold calls at $90 with a $7 premium but needless to say the stock did stop running until it was well over $90. Live and learn. I don't recommend trading options unless you really understand what you are doing. It is a good tool to increase ones return on a stock but ONLY if you truly understand what you are doing. THIS IS NOT A RECOMMENDATION TO GET INVOLVED IN OPTIONS!!! Overall, I'm extremely pleased with my REGN position.
Be a long term investor!!! Perform good due diligence and it will pay off handsomely!!!!