Repligen (RGEN): 2019 Top Picks' Mid-Year Update

07/22/2019 5:00 am EST

Focus: HEALTHCARE

Tyler Laundon

Editor, Cabot Small-Cap Confidential

Tyler Laundon, growth stock specialist and editor of Cabot Small-Cap Confidential, selected Repligen (RGEN) as his favorite idea for 2019. The stock has since risen 63%. Here's his latest update on this leading player in bioprocessing.

Repligen 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, and is coming on strong in both Chromatography and Filtration, which grew by 25% and 85%, respectively, in 2018.  

These solutions help customers overcome capacity, cost, quality and time pressures. It has a market cap of $4.1 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 roughly 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 32% for the past three years and EPS at an average pace of 23%. In 2018, revenue jumped 37% to $194 million while adjusted EPS improved 4% to $0.73. In the first quarter of 2019 revenue was up 35% to $60.6 million while EPS was up 65% to $0.28.

Management updated 2019 revenue guidance above consensus to a range of $235 million to $241 million (implying 22% to 25% growth) and adjusted EPS above consensus to a range of $0.84 to $0.90. Repligen ended Q1 2019 with $196 million in cash and equivalents, implying plenty of room for more M&A activity. 

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