Why Is Repligen (RGEN) Up 2.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Repligen (RGEN). Shares have added about 2.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Repligen due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Repligen Beats on Q2 Earnings, Lowers 2023 Guidance
Repligen reported second-quarter adjusted earnings per share (EPS) of 53 cents, which beat the Zacks Consensus Estimate of 49 cents. The company recorded adjusted earnings of 91 cents per share in the year-ago quarter.
Total revenues of $159.2 million missed the Zacks Consensus Estimate of $167 million. Sales declined 23.3% year over year and 23.1% at constant currency, owing to the expected decline in COVID-related revenues.
Quarter in Detail
The company reported product revenues of $159.1 million, down 23.3% from that recorded in the year-ago period. It also reported royalty and other revenues of $0.03 million, flat year over year.
Repligen’s base business revenues of $157.1 million declined 8.7% year over year at constant currency basis.
The company’s base business can be categorized under four franchises — filtration, chromatography, protein and process analytics.
Repligen’s chromatography and process analytics businesses were the major growth drivers in the second quarter. The uptick in these two business franchises offset the decline in COVID-related revenues.
COVID-related revenues for the reported quarter were nominal at just more than $1 million compared with $36 million in the year-ago quarter.
The company’s chromatography business performed well with 5% growth in revenues. This improvement can be attributed to an increased demand for ARTeSYN systems and flow paths as well as a rise in sales for OPUS pre-packed columns due to growing resin requirement.
Repligen expects its chromatography business to witness 5-10% growth in 2023 compared with the previously projected 10%.
The protein franchise had a good quarter as well, driven by strong demand for NGL ligands that Repligen supplies to Purolite. Repligen expects this business’s 2023 revenues to be down 10-15% owing to a slowdown in demand for pharma accounts.
The filtration franchise’s sales declined 40% year over year due to a drop in COVID-related revenues. The base filtration business was also down 20%.
The process analytics franchise had an excellent quarter. Revenues were up almost 20% year over year as FlowVPX and RPM systems witnessed strong demand in the quarter. Repligen anticipates this business to grow 15% in 2023.
The gene-therapy business recorded 4% growth in revenues.
Adjusted gross margin was 50.2%, down 850 basis points year over year due to a decline in production volumes and a less favorable product mix.
Adjusted research and development expenses totaled approximately $9.7 million, down 5.3% from the year-ago quarter’s level.
Adjusted selling, general and administrative expenses amounted to $40.7 million, down 11.6% year over year.
Adjusted operating income totaled $29.4 million, down 55% from that recorded in the prior-year quarter.
Updated 2023 Guidance
Repligen lowered its profit and sales guidance for 2023due to a challenging macroenvironment and a decline in demand from pharma-based business orders. Significant decrease in COVID-related revenues (compared with the previous year’s level) also contributed to the guidance revision.
The company now expects total revenues in the range of $635-$665 million, down from the earlier projected band of $720-$760 million.
Repligen also anticipates base business revenues to decline 5-10% on a reported basis against the previously projected growth range of 4-8% on the same basis.For the full year, foreign currency impact on base business is expected to be nominal.
Adjusted net income is estimated in the band of $98-$102 million, down from the earlier guidance of $134-$138 million. Adjusted operating income is anticipated in the $104-$110 million range, lower than the earlier projected band of $153-$158 million.
Repligen expects adjusted gross margin in the 50-51% range, down from the previous guidance of 52-53%. Adjusted operating margin is anticipated in the band of 16-17%, also down from the earlier projection of 20.5-21.5%.
Adjusted EPS is anticipated between $1.72 and $1.80, indicating a decline from the prior estimation of $2.35-$2.42.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -64.99% due to these changes.
VGM Scores
Currently, Repligen has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Repligen has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Repligen is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Bristol Myers Squibb (BMY), a stock from the same industry, has gained 0.7%. The company reported its results for the quarter ended June 2023 more than a month ago.
Bristol Myers reported revenues of $11.23 billion in the last reported quarter, representing a year-over-year change of -5.6%. EPS of $1.75 for the same period compares with $1.93 a year ago.
For the current quarter, Bristol Myers is expected to post earnings of $1.84 per share, indicating a change of -7.5% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.8% over the last 30 days.
Bristol Myers has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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