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Repligen (RGEN) Up 4.3% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Repligen (RGEN). Shares have added about 4.3% in that time frame, underperforming 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 drivers.

Repligen Beats Q3 Earnings Estimate, Ups 2022 Guidance

Repligen announced third-quarter 2022 adjusted earnings per share (EPS) of 77 cents, beating the Zacks Consensus Estimate and our estimates of 68 cents. Earnings fell 1.3% year over year.

Total revenues of $200.7 million also surpassed the Zacks Consensus Estimate of $178.2 million and our estimate of $192.3 million. Sales rose 12.6% year over year (19% in constant currency), driven by major growth in the company’s filtration and chromatography franchises and robust demand across its core monoclonal antibody and gene therapy markets.

Excluding the impact of currency and acquisitions/divestitures, Repligen’s organic revenues increased 16% year over year in third-quarter 2022.

Quarter in Detail

In the third quarter, Repligen reported product revenues of $200.7 million, which beat our estimates of $192.2 million, but missed Zacks Consensus Estimate of $201 million. The company reported royalty and other revenues of $0.03 million, which missed both the Zacks Consensus Estimate and our estimates of $0.06 million and $0.1 million respectively.

During the quarter, Repligen’s base business accounted for 83% of revenues, while COVID-related sales constituted 14%. The remaining 3% growth can be attributed to inorganic revenues from the acquisitions made during 2021.

We note that Repligen’s base business can be categorized mainly under four franchises, namely filtration, chromatography, protein and process analytics.

Sales of the company’s overall base business registered growth of 29% in the reported quarter and 35% on a year-to-date basis. Base business, which excludes COVID-related revenues and inorganic mergers and acquisitions, was up almost 40% in the third quarter.  

Repligen’s filtration and chromatography businesses were major growth drivers in the reported quarter. The uptick in these two business franchises offset the decline in COVID-related revenues
Revenues in the filtration business were up 15% organically in the third quarter, driven by alternating tangential flow (ATF) and hollow fiber portfolios. Repligen anticipates its filtration business to witness a 25% growth rate in 2022. Organic growth from the filtration and chromatography businesses was up more than 20% year over year.

Repligen’s process analytics franchises performed well, driven by the continued adoption of FlowVPX, especially in Europe. Repligen anticipates a growth rate of 20% in its process analytics business for the year.

Revenues from the protein franchise were flat in the third quarter, with revenues from growth factors and Purolite offsetting a decline in revenues from Cytiva. Repligen expects the protein business to be down approximately 10% in 2022.

The gene-therapy business represented a year-to-date growth rate of more than 50%, excluding COVID-related revenue at gene therapy accounts. The company’s cell and gene therapy accounted for 14% of the total revenues in the year-to-date period.

Adjusted gross margin was 57% in the third quarter, down 130 basis points (bps) year over year, compared to 58.3% in the year-ago quarter.

For the reported quarter, adjusted research and development expenses were $10.19 million, up 16.1% from the year-ago quarter’s figure.

Adjusted selling, general and administrative expenses were $46.0 million, surging 21% year over year.

Adjusted operating income was $58.2 million, up 2.1% year over year. Adjusted operating margin was 29%, down 600 bps year over year.

As of Sep 30, 2022, Repligen had cash and cash equivalents worth $573.4 million compared with $596.5 million on Jun 30, 2022.

Updated 2022 Guidance

Repligen raised its sales and profit guidance for 2022.

Repligen raised the revenue guidance for the company and now expects revenues in the range of $795-$805 million, up from the earlier projected levels of $790-$810 million. The new revenue guidance indicates overall revenue growth of 19-20% year over year on a reported basis and 24-25% growth on a constant-currency basis. Organic growth is now expected in the range of 21-22%, up from the previous range of 19-22%.

Repligen now expects base business revenues to increase 33-34%, up from the previously-issued guidance of 31-33%

Repligen anticipates increased projected demand for products sold under its base business. However, RGEN expects the rise in revenue to be offset by dampened COVID-related sales due to slowing vaccination rates.

Adjusted net income is now projected in the $181-$184 million band, up from the earlier guidance of $180-$184 million. Adjusted operating income is anticipated within $231-$235 million, down from the earlier projected $234-$239 million band.

Adjusted EPS is anticipated within $3.15-$3.20, up from the earlier guidance of $3.13-$3.20.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -13.22% due to these changes.

VGM Scores

At this time, Repligen has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. 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. Notably, Repligen has a Zacks Rank #3 (Hold). We expect an in-line 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, Biogen Inc. (BIIB), a stock from the same industry, has gained 9.6%. The company reported its results for the quarter ended September 2022 more than a month ago.

Biogen Inc. reported revenues of $2.51 billion in the last reported quarter, representing a year-over-year change of -9.7%. EPS of $4.77 for the same period compares with $4.77 a year ago.

Biogen Inc. is expected to post earnings of $3.41 per share for the current quarter, representing a year-over-year change of +0.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.4%.

Biogen Inc. has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.

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