Regeneron Nears Chart Support After Antibody Cocktail Approval

Regeneron Pharmaceuticals, Inc. (REGN) gained 0.94% Monday after The Food and Drug Administration (FDA) fast-tracked emergency authorization over the weekend of the biopharmaceutical company’s coronavirus dual monoclonal antibody treatment REGN-COV2.

The experimental therapy – given to President Trump when he contacted the deadly disease last month – works by binding antibodies to the coronavirus’ spike protein, limiting the ability of viruses to escape. In other words, the therapy attempts to speed up a patient’s immune system in preparation to fight the disease at its onset. Although the cocktail of drugs continues to undergo testing, the FDA said early results suggest the drug may reduce COVID-19-related hospitalization or emergency visits in patients at high risk for disease progression.

The development comes as the United States on Sunday reported 142,732 new infections and registered a record number of hospitalizations for the 13th consecutive day. “The emergency authorization of these monoclonal antibodies administered together offers health care providers another tool in combating the pandemic,” Patrizia Cavazzoni, M.D., acting director of the FDA’s Center for Drug Evaluation and Research, told the Wall Street Journal.

As of Nov. 24, 2020, Regeneron has a market capitalization of $55.87 billion and trades nearly 10% lower over the last month. However, the shares have returned 39.45% year to date (YTD). From a valuation standpoint, the company trades at a 41% discount to its five-year forward earnings multiple of around 22 times.

Wall Street View

Truist analyst Robyn Karnauskas raised the firm’s price target on Regeneron earlier this month to $770 from $750 while reiterating a ‘Buy’ rating. Karnauskas cited the company’s impressive Q3 Eylea and Dupi sales, as well as its pipeline execution ability during the pandemic, for the price upgrade. She also believes multiple potential approvals in 2021 will support further upside.

Sentiment elsewhere on the Street remains mostly bullish. The stock receives 13 ‘Buy’ ratings, 2 ‘Overweight’ ratings, and 11 ‘Hold’ ratings. Price targets range between $793 and $550, with the median 12-month target pegged at $675. This implies a healthy premium of 29% to Monday’s $523.61 close.

Technical Outlook and Trading Tactics

Since topping out at nearly $665 a share in mid-July, the price has traded mostly sideways to lower as investors waited for testing results of the company’s COVID-19 treatments. More recently, the stock slipped below the closely watched 200-day simple moving average (SMA) last week but found buying support yesterday near a four-month horizontal trendline.

Those who anticipate a reversal at these levels should target a move back to the 52-week/ATH at $664.64 while protecting capital with a stop-loss order placed beneath the November low at $509.34.

For a look at today’s earnings schedule, check out our earnings calendar.