Sinking Drug Stock Regeneron Pharmaceuticals Looks for an Earnings Bounce

Regeneron reports earnings before the bell tomorrow

Feb 7, 2018 at 1:57 PM
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Biotech stock Regeneron Pharmaceuticals Inc (NASDAQ:REGN) has been trending lower since mid-2017, shedding almost 30% in the past six months to trade at $335.60, after just yesterday hitting a three-year low of $319.50. But with the company preparing to report earnings before the open tomorrow, Feb. 8, it should be pointed out at that this technical weakness has come despite a fairly strong post-earnings history. What's more, REGN tends to outperform after big stock market pullbacks.

Regeneron stock has gained in the session after earnings five out of eight times over the past two years, including a 2.7% tick higher in November. On average, the shares have swung 3.5% the day after reports, regardless of direction. This time around, however, the options market is pricing in a much bigger move of 7.2%, based on at-the-money implied volatility (IV) data.

Sentiment for REGN is mixed. There are 24 brokerage firms covering the equity, and 10 of them say it's worth buying, compared to 13 "hold" opinions and one "strong sell." The average 12-month price target from this group stands all the way up at $443.80, an almost 33% premium to current levels.

As alluded to earlier, REGN has historically been one of the best stocks to buy after a sharp market pullback. Following the past 11 such dips, the biotech was higher one month out more than half the time, averaging a healthy gain of 8.75%, per recent data from Schaeffer's Senior Quantitative Analyst Rocky White. A similar surge from current levels would place the shares around $365 -- back above the $360 area that acted as support for Regeneron stock on several occasions since early 2017.


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