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Royalty Pharma PLC (RPRX)
NASDAQ:RPRX
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Royalty Pharma
(NASDAQ:RPRX)
78Outperform
Positive Factors
Financial Performance
The acquisition is expected to reduce costs and enhance economic returns on investments.
Revenue Growth
Royalty Pharma's execution is impressive with solid mid-teens recurring revenue growth and prudent capital deployment.
Shareholder Confidence
A $3B share buyback program boosts EPS and exemplifies management confidence.
Negative Factors
Investor Concerns
RPRX is acquiring its external manager in a near-term cash accretive deal, reforming a legacy structure that was a concern to some investors.
Litigation Risk
Clarity on Vertex’s deuterated-triplet litigation is expected in the future, with significant potential financial implications based on royalty outcomes.
Royalty Pharma (RPRX) vs. S&P 500 (SPY)
Market Cap
$18.79B
Dividend Yield2.61%
Average Volume (3M)4.82M
Price to Earnings (P/E)17.1
Beta (1Y)0.27
Revenue Growth-3.85%
EPS Growth-24.34%
CountryUS
Employees75
SectorHealthcare
Sector Strength66
IndustryBiotechnology
Share Statistics
EPS (TTM)1.92
Shares Outstanding433,324,900
10 Day Avg. Volume5,061,545
30 Day Avg. Volume4,821,517
Financial Highlights & Ratios
PEG Ratio0.02
Price to Book (P/B)N/A
Price to Sales (P/S)8.58
Price to Cash Flow (P/CF)6.50
P/FCF Ratio6.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$39.25Price Target Upside21.93% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Royalty Pharma Business Overview & Revenue Model
Company DescriptionRoyalty Pharma plc operates as a buyer of biopharmaceutical royalties and a funder of innovations in the biopharmaceutical industry in the United States. It is also involved in the identification, evaluation, and acquisition of royalties on various biopharmaceutical therapies. In addition, the company collaborates with innovators from academic institutions, research hospitals and not-for-profits, small and mid-cap biotechnology companies, and pharmaceutical companies. Its portfolio consists of royalties on approximately 35 marketed therapies and 10 development-stage product candidates that address various therapeutic areas, such as rare disease, cancer, neurology, infectious disease, hematology, and diabetes. The company was founded in 1996 and is based in New York, New York.
How the Company Makes MoneyRoyalty Pharma makes money primarily through the acquisition of pharmaceutical royalties. The company invests in promising biopharmaceutical products by purchasing existing royalty rights or providing capital to fund late-stage clinical trials and product launches. In return, Royalty Pharma receives a percentage of future sales, generating revenue as these therapies succeed in the market. The company benefits from its diverse portfolio of royalties on a broad range of successful drugs, mitigating risk and ensuring a steady income stream. Significant partnerships with major pharmaceutical companies and research institutions bolster Royalty Pharma's ability to identify and secure high-potential royalty agreements, contributing to its robust financial performance.
Royalty Pharma Financial Statement Overview
Summary
Royalty Pharma presents a solid financial position characterized by strong profitability, a robust balance sheet with no debt, and healthy cash flow metrics. However, challenges include a declining revenue growth rate of -3.85% and a negative free cash flow growth rate of -7.29%, which may affect future growth prospects.Income Statement
Royalty Pharma demonstrates robust profitability with a high Gross Profit Margin of 73.90% and a strong Net Profit Margin of 37.93% for TTM. However, the company faces challenges with a declining Revenue Growth Rate of -3.85% from the previous year, indicating potential stagnation in revenue expansion.78
Positive
Balance Sheet
The company shows a strong balance sheet with no debt, significantly lowering financial risk. The Equity Ratio is solid at 56.75%, indicating a strong equity base relative to assets. The ROE is impressive at 8.30%, showing effective use of equity to generate profit.85
Very Positive
Cash Flow
Cash flow analysis reflects a stable position with a high Operating Cash Flow to Net Income Ratio of 3.24, suggesting excellent cash generation relative to net income. The Free Cash Flow to Net Income Ratio is also strong at 3.23, indicating efficient conversion of income to free cash flow, although Free Cash Flow Growth Rate is negative at -7.29%, pointing to potential pressure on cash flow growth.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.26B | 2.35B | 2.24B | 2.29B | 2.12B | Gross Profit |
| 2.26B | 1.79B | 2.23B | 2.27B | 2.03B | EBIT |
| 1.29B | 1.49B | 977.50M | 1.43B | 1.59B | EBITDA |
| 1.29B | 1.89B | 928.56M | 1.45B | 1.68B | Net Income Common Stockholders |
| 859.00M | 1.13B | 42.83M | 478.75M | 495.20M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 987.23M | 495.31M | 2.43B | 2.80B | 1.99B | Total Assets |
| 18.22B | 16.38B | 16.81B | 17.52B | 21.10B | Total Debt |
| 7.61B | 6.14B | 7.12B | 7.10B | 5.82B | Net Debt |
| 6.68B | 5.66B | 5.41B | 5.56B | 4.81B | Total Liabilities |
| 7.88B | 6.30B | 7.29B | 7.27B | 6.12B | Stockholders Equity |
| 10.34B | 6.53B | 5.63B | 5.78B | 9.90B |
| Cash Flow | Free Cash Flow | |||
| 2.77B | 2.99B | 2.14B | 2.02B | 2.03B | Operating Cash Flow |
| 2.77B | 2.99B | 2.14B | 2.02B | 2.03B | Investing Cash Flow |
| -2.68B | -2.07B | -1.03B | -1.87B | -2.76B | Financing Cash Flow |
| 361.14M | -2.15B | -944.86M | 385.11M | 1.49B |
Royalty Pharma Technical Analysis
Positive
32.19
Price Trends
32.53
Negative
30.02
Positive
28.53
Positive
Market Momentum
-0.04
Negative
50.83
Neutral
88.14
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RPRX, the sentiment is Positive. The current price of 32.19 is above the 20-day moving average (MA) of 31.88, below the 50-day MA of 32.53, and above the 200-day MA of 28.53, indicating a neutral trend. The MACD of -0.04 indicates Negative momentum. The RSI at 50.83 is Neutral, neither overbought nor oversold. The STOCH value of 88.14 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RPRX.
Royalty Pharma Risk Analysis
Royalty Pharma disclosed 65 risk factors in its most recent earnings report. Royalty Pharma reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Royalty Pharma Peers Comparison
Overall Rating
UnderperformOutperform
Sector (50)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
84 Outperform | $12.09B | 11.32 | 23.16% | ― | 30.43% | 82.29% | |
80 Outperform | $10.13B | 20.42 | 23.13% | ― | 18.49% | 176.71% | |
78 Outperform | $18.79B | 17.05 | 12.75% | 2.61% | -3.85% | -24.34% | |
67 Neutral | $11.27B | 214.64 | 0.76% | ― | 14.76% | -88.32% | |
59 Neutral | $23.70B | ― | -3.38% | ― | -27.64% | -172.62% | |
50 Neutral | $5.14B | 3.10 | -40.94% | 2.95% | 17.94% | 2.00% | |
46 Neutral | $9.54B | ― | -28.77% | ― | -52.75% | 25.00% |
* Healthcare Sector Average
Performance Comparison
RPRX
Royalty Pharma
32.19
5.19
19.22%
EXEL
Exelixis
35.59
12.72
55.62%
INCY
Incyte
56.80
4.88
9.40%
GMAB
Genmab
20.07
-8.90
-30.72%
MRNA
Moderna
25.13
-79.33
-75.94%
BNTX
BioNTech SE
101.81
13.80
15.68%
Royalty Pharma Earnings Call Summary
Earnings Call Date: Feb 11, 2025 | % Change Since: 2.16% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Positive
The earnings call for Royalty Pharma presents a positive outlook with significant portfolio growth, strategic FDA approvals, strong capital deployment, and the internalization transaction poised to deliver substantial future savings. Despite some challenges, such as the impact of onetime Biohaven payments and potential interest expense increases, the company's robust financial performance and strategic initiatives suggest a strong position for future growth.Highlights
Record Portfolio Receipts and Growth
Royalty Pharma delivered Portfolio Receipts of $2.8 billion for 2024, representing a growth of 13%, which significantly exceeded their initial guidance of 5% to 9%.
FDA Approvals and Strategic Portfolio Additions
The company saw FDA approvals for Voranigo for brain cancer, Cobenfy for schizophrenia, and Tremfya for ulcerative colitis, along with the acceptance of the NDA for Cytokinetics' aficamten for obstructive hypertrophic cardiomyopathy.
Strong Capital Deployment
Royalty Pharma deployed $2.8 billion to broaden its portfolio and $230 million on share repurchases. They announced a new $3 billion share repurchase plan, intending to repurchase $2 billion in 2025.
Internalization Transaction
Announced a transformative acquisition of their external manager to become an integrated company, expected to yield strategic and financial benefits, including savings of over $100 million in 2026.
Synthetic Royalties Growth
Achieved a record year for synthetic royalty transactions of $925 million in 2024, more than doubling since 2020.
Strong Cash Flow Generation
Royalty Receipts grew by 13% for the year, and the company maintained a high cash conversion rate with a portfolio cash flow of $2.45 billion at a margin of just under 88%.
Resilient Financial Capacity
Ended the year with $929 million in cash and equivalents, with an investment-grade debt outstanding of $7.8 billion and a leverage ratio of around 3x total debt to EBITDA.
Lowlights
Onetime Biohaven Milestone Impact
The decrease in portfolio receipts was primarily due to onetime Biohaven-related milestone payments received in 2023, impacting the year-over-year comparisons.
Interest Expense Increase
Interest paid in 2025 is expected to be around $250 million, a year-over-year increase reflecting interest payments from the $1.5 billion of notes issued in June 2024.
Potential IRA and Medicare Part D Redesign Impact
The guidance for 2025 takes into account scenarios for the impact of IRA and Medicare Part D redesign on the portfolio.
Company Guidance
During the Royalty Pharma Fourth Quarter Earnings Conference, the guidance for 2025 was outlined, highlighting anticipated Portfolio Receipts of $2.9 billion to $3.05 billion, reflecting a growth rate of approximately 4% to 9% from 2024's Portfolio Receipts of $2.8 billion. The company noted that its 13% growth in Royalty Receipts for 2024 significantly exceeded the initial guidance of 5% to 9%. Looking ahead, the company plans to allocate $2 billion towards share repurchases in 2025 as part of a new $3 billion share repurchase plan. Additionally, operational costs are expected to be around 10% of Portfolio Receipts, with potential cash savings of over $100 million anticipated in 2026 following the internalization of the company's management structure. This internalization is expected to yield cumulative savings exceeding $1.6 billion over the next decade.Royalty Pharma Corporate Events
Executive/Board Changes
Royalty Pharma Appoints Dr. Vlad Coric to Board
Positive
Apr 10, 2025
On April 8, 2025, Royalty Pharma announced the appointment of Dr. Vlad Coric to its Board of Directors, effective immediately. Dr. Coric, who has extensive experience in the biopharmaceutical industry, is expected to bring significant expertise to Royalty Pharma, particularly in the royalty funding space, enhancing the company’s position as a leading partner in life sciences innovation.
Spark’s Take on RPRX Stock
According to Spark, TipRanks’ AI Analyst, RPRX is a Outperform.
Royalty Pharma scores well overall, driven by strong financials, strategic growth plans, and positive earnings call sentiment. While technical indicators suggest caution due to potential overbought conditions, the company’s strategic initiatives, such as the significant share repurchase plan and FDA approvals, bolster its growth outlook. Valuation is fair but not overly attractive, with a decent dividend yield providing additional investor appeal.
To see Spark’s full report on RPRX stock, click here.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.