Regeneron (REGN) Downgraded at RBC Capital, Price Target Cut Sharply

On May 30, RBC Capital analyst Brian Abrahams downgraded Regeneron Pharmaceuticals Inc. (NASDAQ:REGN) to Sector Perform from Outperform, and sharply reduced the stock’s price target to $662 from $943. Abrahams’ action follows disappointing clinical results for the company’s key pipeline asset, itepekimab. In his view, the outcome significantly narrows the drug’s potential and limits its future commercial opportunities.

Itepekimab is a drug developed by Regeneron using its proprietary VelocImmune technology. It is a lab-engineered antibody designed to block a protein in the body called IL-33, which plays a role in inflammation, particularly in patients with COPD (chronic obstructive pulmonary disease). Regeneron and Sanofi (NASDAQ:SNY) are collaborating on the global development of this drug.

Despite the setback, Abrahams remains optimistic about Regeneron’s R&D efforts. He sees strong long-term potential in the company’s ability to innovate and believes the stock might be undervalued. Therefore, a short-term recovery from its current level wouldn’t be surprising.

That said, the analyst argues that material outperformance in the near term is unlikely unless another pipeline candidate emerges with multi-billion-dollar potential or the company witnesses substantial success at another external business development initiative, both of which the analyst believes are doubtful at this time. Given the lack of near-term catalysts, the analyst has turned cautious on Regeneron.

Regeneron is a biotechnology company that invents, develops, and commercializes medicines for people with serious diseases, including allergic and inflammatory diseases, cancer, cardiovascular and metabolic diseases, neurological diseases, hematologic conditions, and infectious diseases.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.