Despite several uncertainties, the overall U.S. economy is continuing to demonstrate a solid recovery. With favorable central bank policies and potential federal spending, the economy should continue to grow. Given this backdrop, growth-focused stocks with a significant market share and solid fundamentals, such as Regeneron Pharmaceuticals (REGN), Piper Sandler (PIPR), and Marcus & Millichap (MMI) could see a significant increase in their earnings this year.
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Despite the continued spread of the Delta coronavirus variant, the economy demonstrates a solid recovery, supported by an accommodative monetary policy and federal spending. The proposed infrastructure spending should boost the performance of several industries, strengthening the economy further.
Spending rose in August by 0.8% while personal income increased 0.2%, reflecting a positive picture. Moreover, The Congressional Budget Office (CBO) estimates real GDP growth of 7.4% year-over-year in the fourth quarter of this year.
Given the expectation of continued economic recovery, growth stocks Regeneron Pharmaceuticals, Inc. (REGN), Piper Sandler Companies (PIPR), and Marcus & Millichap, Inc. (MMI) could witness impressive earnings growth this year. Analysts expect their earnings to increase by at least 70% this year. Thus, these stocks could be solid additions to your portfolio now.
Regeneron Pharmaceuticals, Inc. (REGN)
REGN operates as a biotechnology company that provides medicines for treating myriad diseases like eye diseases, inflammatory and hematologic conditions, and infectious diseases like Ebola and COVID-19.
On September 28, REGN received Food and Drug Administration (FDA) acceptance for priority review of supplemental Biologics License Application (sBLA) for cervical cancer drug Libtayo®. The sBLA allows the drug to be reviewed by health authorities of different nations for administering in cases where the patient’s disease has progressed on or after chemotherapy. If the drug gets the final approval, this should strengthen the company’s position in the industry.
Earlier in September, the United States Department of Health and Human Services (HHS) and the Department of Defense (DOD) agreed to purchase 1.4 million doses of the antibody cocktail REGEN-COV (casirivimab and imdevimab), to be delivered over the fourth quarter. This sale should generate substantial returns for REGN.
REGN’s revenue went up 163.2% year-over-year to $5.14 billion in the fiscal second quarter ended June 30, while income from operations increased 409.9% year-over-year to $3.35 billion. The non-GAAP net income stood at $2.90 billion, up 238.8% from the same period last year. Non-GAAP net income per share improved 260.3% from the prior-year quarter to $25.80.
Analysts expect EPS to come in at $61.86 for the current year (fiscal 2021), indicating a 96.6% year-over-year increase. Street revenue estimate of $14.38 billion for the same year reflects a 69.3% year-over-year improvement. Moreover, REGN has an impressive earnings surprise history as it has topped consensus EPS estimates in each of the trailing four quarters.
REGN’s stock has gained 18.2% year-to-date and 20.2% over the past six months to close Friday’s trading session at $570.79.
REGN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has a Sentiment grade of A, and a Growth, Value, and Quality grade of B. In the 504-stock Biotech industry, it is ranked #6.
We also have graded REGN for Momentum and Stability. Click here to access all of REGN’s ratings.
Piper Sandler Companies (PIPR)
PIPR is an investment banking company. Its services include investment banking, advisory regarding mergers and acquisitions, and research on various equity and fixed income products.
On September 23, PIPR expanded its global financial sponsors’ group in Europe by hiring Christian Hess as Managing Director and European head of financial sponsors. About this development, Peter Hall, Head of European Investment Banking, said, “Christian’s UK and pan-European experience will benefit both the firm and our private equity clients. As we grow Piper Sandler’s European sector capabilities in healthcare, energy, chemicals, consumer, technology, industrial services and financial services, a coordinated sponsor coverage effort will be hugely additive.”
Earlier in July, PIPR advised private investment firm Falcon Private Holdings, LLC on its sale of Aristech Surfaces LLC to Trinseo S.A. (TSE). Over the past couple of months, PIPR has been chosen by several companies for its advisory services on acquisitions and sales. This demonstrates the company’s solid position in the financial advisory space.
In the fiscal second quarter ended June 30, PIPR’s adjusted net revenue rose 68.3% year-over-year to $492.67 million. The company’s adjusted operating margin improved 10 percentage points from the same period last year to 27.7%. Its adjusted net income improved 185.8% year-over-year to $98.57 million, while adjusted EPS came in at $5.37, indicating a 178.2% increase from the prior-year quarter.
The consensus EPS estimate for the ongoing year (fiscal 2021) of $17.70 indicates a 76.6% year-over-year increase. Likewise, the consensus revenue estimate of $1.76 billion for the current year reflects a rise of 42.2% from the prior year. In addition, PIPR has topped the consensus EPS estimate in each of the trailing four quarters, which is impressive.
The stock has gained 89% over the past year to close Friday’s trading session at $142.19. It has also gained 40.9% year-to-date.
PIPR’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A which translates to Strong Buy in our POWR Rating system.
The stock has a Growth, Value, Momentum, Sentiment, and Quality grade of B. In the 23-stock Investment Brokerage Industry, it is ranked #1. This industry is rated B.
In addition to the POWR Rating grades we’ve stated above, one can see the PIPR’s rating for Stability here.
Marcus & Millichap, Inc. (MMI)
MMI provides brokerage services for buyers and sellers of commercial real estate in the U.S. and Canada. The company provides commercial real estate investment sales, financing, research, and advisory services for its customers.
On September 24, MMI announced the sale of Phoenix-based 548-unit multifamily asset complex Accolade for $155 million. The sale was facilitated by the MMI division Institutional Property Advisors (IPA) and is expected to improve the company’s financial profile significantly.
In August, MMI brokered the sale of Skandia Mobile Country Club, a 167-unit mobile home complex located in Huntington Beach, California, for $58 million. The company brokered several asset sales in August, capitalizing on the housing market.
For the second fiscal quarter ended June 30, MMI’s total revenue increased 142.7% year-over-year to $284.94 million. Adjusted EBITDA went up 1,059.3% from the prior-year quarter to $48.11 million. Net income rose 29,647.2% year-over-year to $31.53 million. EPS came in at $0.78 for the quarter.
Street EPS estimate of $1.86 for the current year (fiscal 2021) indicates a 72.2% year-over-year increase, while Street revenue estimate of $915.23 million for the ongoing year reflects an improvement of 27.7% from the prior year. Moreover, MMI has beat consensus EPS estimates in each of the trailing four quarters.
The stock has gained 44.4% over the past year and 21.1% over the past six months to close Friday’s trading session at $41.42.
It’s no surprise that MMI has an overall A rating, which equates to Strong Buy in our proprietary rating system.
MMI has an A grade for Growth, and a B grade for Momentum, Sentiment, and Quality. It is ranked #1 out of the 44 stocks in the Real Estate Services industry.
Click here to see the additional POWR Ratings for MMI (Value and Stability).
REGN shares were unchanged in after-hours trading Monday. Year-to-date, REGN has gained 14.97%, versus a 15.77% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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