Repligen (RGEN) makes equipment for use in the production cycle of biological pharmaceuticals, from cell cultures through purification (called chromatography) to the formulation of vaccines, explains Mike Cintolo, growth stock expert and editor of Cabot Top Ten Trader.
The company’s equipment is used in mainstream pharmaceutical research as well as emerging areas like mRNA; given mRNA is the basis of two of the most popular COVID-19 vaccines (from Pfizer/BioNtech and Moderna), business has been strong for Repligen, with COVID-related orders expected to account for about a quarter of sales this year.
But Repligen isn’t just a pandemic play, with management saying “organic” (non-COVID, excluding acquisitions) sales should grow nearly 60% this year as total revenue totals more than $625 million.
Its business is in a sweet spot of being very well-situated in its markets while still having lots of share to take in its four segments: Process analytics, proteins, filtration and chromatography, where Repligen has its largest market share, at 20%.
Biopharmaceutical researchers are continually looking for ways to make more efficient use of their researchers’ time, and Repligen products fill that need. For instance, its pre-packed columns are sets of resins used in chromatography so lab workers don’t have to pack themselves, speeding up work and providing more consistent results. Repligen has about half that market.
Management has been aggressive in buying companies to fill out its product line, making eight significant acquisitions since 2014, including three in the past year that beefed up its fluid management offerings. Longer term, Repligen is targeting $1 billion in revenue by 2024, which would be nearly three times last year’s sales.
Technically, RGEN has enjoyed a good-sized run over the past couple of years, but ran into trouble earlier this year with most growth stocks.
The correction of 29% from high to low was par for the course, but the action improved a lot after the May low, with the minor early-July pullback setting the stage for last week’s huge-volume leap to new highs. RGEN can be a bit thinly traded, so we advise aiming for dips if you want in.
