Top Picks 2019: Repligen (RGEN)

01/10/2019 5:00 am EST

Focus: HEALTHCARE

Tyler Laundon

Editor, Cabot Small-Cap Confidential

Repligen (RGEN) is a pure-play supplier of bioprocessing technologies. It is a market leader in proteins (over 95% market share), where it has a near monopoly, explains Tyler Laundon, editor of Cabot Small-Cap Confidential.

Meanwhile, the company is coming on strong in both chromatography and filtration, which are both growing at over 20% in 2018. These solutions help customers overcome capacity, cost, quality and time pressures. It has a market cap of $2.3 billion.

Repligen is as much a partner as a supplier to its customers given the heavily regulated nature of bioprocessing and the strategic importance its products play in the drug approval and manufacturing process.

Customers are large biopharmaceutical companies and contract manufacturing organizations, including GE Healthcare and MilliporeSigma. Repligen also does business with life science companies, diagnostic companies and laboratory researchers. This 60/40 mix of clinical and commercial exposure gives Repligen a relatively stable, long-term growth profile.

Repligen has grown revenue at an average annual rate of 31% for the past three years and EPS at an average pace of 38%. In 2017, revenue jumped 35% to $141 million while EPS soared 43% to $0.70. Through the first three quarters of 2018 revenue is up 43% while EPS is up $0.02 to $0.52.

Management updated 2018 revenue guidance above consensus ($188 million) to a range of $191 million to $194 million (implying 35% to 37% growth) and adjusted EPS above consensus ($0.71) to a range of $0.71 to $0.75. Repligen ended Q3 with $190 million in cash and equivalents, implying plenty of room for more M&A activity.

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