It has been about a month since the last earnings report for Repligen (RGEN). Shares have added about 2.7% 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 Q1 Earnings, Revises 2023 Guidance
Repligen reported adjusted earnings per share (EPS) of 64 cents, which beat the Zacks Consensus Estimate of 59 cents and our model estimates of 57 cents. The bottom line, however, declined 30% year over year.
Total revenues of $183 million outpaced the Zacks Consensus Estimate of $181 million and our model estimates of $179.9 million. Sales declined 12% year over year and 9% at constant currency (cc) due to predicted decline in COVID-related revenues.
Quarter in Details
The company reported product revenues of $182.6 million, down 11.5% from that recorded in the year-ago period. It also recorded royalty and other revenues of $0.39 million, almost flat year over year.
Repligen’s base business revenues were up 7% year over year on cc basis.
The chromatography and proteins businesses were the major growth drivers in the first quarter of 2023. The uptick in these two business franchises offset the decline in COVID-related revenues.
The company’s chromatography business performed well with 20% growth in revenues. This improvement can be attributed to an increased demand for OPUS pre-packed columns due to growing resin requirement.
Repligen expects its chromatography business to witness a 10% growth rate in 2023.
The protein franchise had a good quarter as well, driven by strong demand for NGL ligands that Repligen supplies to Purolite. However, the surge in revenues was partially offset by a decline in demand for Cytiva. The company expects this business’s 2023 revenues to be flat year over year.
The filtration franchise’s sales declined 20% year over year due to a decline in COVID-related revenues. The base filtration business was also down almost 5%. The company expects this business to recover in the third quarter of 2023 as the macro headwinds, such as the impact of currency, are likely to subside by then.
The process analytics franchise had an excellent quarter. Revenues were up 30% year over year. Repligen anticipates this business to grow 15-20% in 2023.
The gene-therapy business recorded 20% growth in revenues.
Adjusted gross margin was 55.2%, down 520 basis points (bps) year over year due to increased material cost, currency headwinds and a less favorable product mix.
Adjusted research and development expenses came in at $12.1 million, up 3% from the year-ago quarter’s level.
Adjusted selling, general and administrative expenses amounted to $47.7 million, up 5% year over year.
Adjusted operating income totaled $40.9 million, down 39% from that recorded in the prior-year quarter. Adjusted operating margin was 22.4%, down 1020 bps year over year.
Updated 2023 Guidance
Repligen lowered its sales and profit guidance for 2023.
The company now expects total revenues in the range of $720-$760 million, down from the earlier projected level of $760-$800 million. Thisis due to lower base business revenues.
Repligen also anticipates base business revenues to increase 4-8% on a reported and constant currency basis. The range is lower than the previous guidance of 11-15% on a reported basis and 12-16% at cc.
Adjusted net income is projected in the band of $134-$138 million, down from the earlier guidance of $149-$154 million. Adjusted operating income is anticipated in the $153-$158 million range, lower than the earlier projected band of $176-$182 million.
Repligen projects adjusted gross margin in the 52-53% range, down from the previous guidance of 52.5-53.5%. Adjusted operating margin is expected in the range of 20.5-21.5%, also down from the earlier guidance of 22.5-23.5%.
Adjusted EPS is anticipated between $2.35 and $2.42, indicating a decline from the prior estimation of $2.61-$2.69.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -18.18% due to these changes.
Currently, Repligen has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
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 #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Repligen belongs to the Zacks Medical - Biomedical and Genetics industry. Another stock from the same industry, Illumina (ILMN), has gained 0.1% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Illumina reported revenues of $1.09 billion in the last reported quarter, representing a year-over-year change of -11.1%. EPS of $0.08 for the same period compares with $1.07 a year ago.
Illumina is expected to post earnings of $0.03 per share for the current quarter, representing a year-over-year change of -94.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -58.1%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Illumina. Also, the stock has a VGM Score of D.
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