Sound Shore Fund, Inc. on Regeneron Pharmaceuticals, Inc.
Thesis
Sound Shore initiated Regeneron when the shares traded at roughly 13 times earnings with an 8% free-cash-flow yield. The company has a fortress balance sheet and a pipeline with several drugs that the fund believes carry meaningful value not reflected in the current valuation. Recent mixed melanoma trial results hurt the stock, but the fund continues to see attractive upside from the broader pipeline relative to the price being paid.
“The company has a fortress balance sheet and a number of pipeline drugs that show great promise that we don’t think we are paying for at this valuation.”
Key risks
- Mixed clinical trial results
- Pipeline and drug-development risk