Royalty Pharma Misses Revenue Estimates Despite Positive Growth Outlook

Royalty Pharma reported a 20% revenue miss in its latest quarterly earnings, but delivered earnings per share of $0.98, beating the consensus estimate. Analysts maintain a positive outlook for the company's growth prospects, predicting a 20% revenue growth to $2.69 billion in 2024.

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Aqsa Younas Rana
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Royalty Pharma Misses Revenue Estimates Despite Positive Growth Outlook

Royalty Pharma Misses Revenue Estimates Despite Positive Growth Outlook

Royalty Pharma plc (NASDAQ:RPRX), a biopharmaceutical company, reported a 20% revenue miss in its latest quarterly earnings. The company posted revenues of $568 million, falling short of analysts' expectations of $671.45 million. Despite the revenue miss, Royalty Pharma delivered earnings per share (EPS) of $0.98, beating the consensus estimate of $0.96 by $0.02.

Why this matters: The revenue miss and subsequent EPS estimates reduction may have a ripple effect on the biopharmaceutical industry, influencing investor confidence and potentially impacting the development of new treatments. As Royalty Pharma is expected to outpace the wider industry in revenue growth, its performance can serve as a bellwether for the sector's overall health.

Looking ahead, analysts maintain a positive outlook for Royalty Pharma's growth prospects. They predict a 20% revenue growth to $2.69 billion in 2024, representing a significant improvement compared to the last 12 months. Furthermore, statutory EPS is expected to increase by 14% to $2.02 in 2024. The analysts' consensus price target remains steady at $45.75, indicating that the lower forecast earnings are not anticipated to negatively impact the stock price in the near future.

The range of analyst estimates for Royalty Pharma is relatively narrow, with the most bullish analyst valuing the company at $60.00 per share and the most bearish at $37.00 per share. Following the latest results, analysts have become more bearish, reducing their EPS estimates. However, there were no changes to revenue forecasts.

Royalty Pharma's growth outlook appears brighter than its recent past. Analysts forecast an annualized growth rate of 28% through the end of 2024, which compares favorably to the historical growth of 1.3% per annum over the past three years. The company is expected to outpace the wider industry, with analysts projecting revenue growth of 9.3% per year for similar companies.

Despite the positive growth outlook, the analysts' reduced EPS estimates suggest that Royalty Pharma may face some business headwinds in the near term. However, the long-term trajectory of the company's earnings remains more critical than next year's forecasts. Royalty Pharma announced a quarterly dividend of $0.21 per share, payable on June 14th to investors of record on May 17th. The dividend represents an annualized payout of $0.84 per share and a yield of 2.99%.

Several institutional investors have recently adjusted their positions in Royalty Pharma. Metis Global Partners LLC purchased a new stake valued at approximately $375,000, while other investors, including Allworth Financial LP, EverSource Wealth Advisors LLC, Lindbrook Capital LLC, Rakuten Securities Inc., and PNC Financial Services Group Inc., increased their holdings in the company.

Royalty Pharma's stock has been the subject of several recent research reports. StockNews.com downgraded the company from a "buy" rating to a "hold" rating, while Bank of America, JPMorgan Chase & Co., and The Goldman Sachs Group lowered their price targets on the stock. Currently, one investment analyst has rated Royalty Pharma with a hold rating, and four have assigned a buy rating, resulting in a consensus rating of "Moderate Buy" and an average target price of $46.75.

Key Takeaways

  • Royalty Pharma misses revenue estimates by 20% with $568M in Q1.
  • EPS beats estimates at $0.98, but analysts reduce forecasts.
  • Analysts predict 20% revenue growth to $2.69B in 2024.
  • Company's growth outlook is strong, with 28% annualized growth rate.
  • Royalty Pharma announces $0.21 quarterly dividend, yielding 2.99%.