Repligen Corporation (RGEN, $288.54): “Robust
Momentum for Repligen”
By: Jack
Cyganiak, AIM Student at Marquette University
Disclosure:
The AIM Equity Fund currently holds this position. This article was written by
myself, and it expresses my own opinions. I am not receiving compensation for
it and I have no business relationship with any company whose stock is
mentioned in this article.
Summary
• Repligen Corporation (NASDAQ: RGEN) offers bioprocessing technology
and solutions used in the manufacturing process of biological drugs.
• RGEN revenue increased by 35%
YoY from 2019 to 2020.
• EPS increased over 150% YoY
from 2019 to 2020.
• RGEN acquired Polymem in June
2021, which is a leading industrial expert in developing and manufacturing
hollow fiber membranes and modules.
• Integration of EMT, NMS, and
ARTeSYM, acquisitions occurring in 2020, has gone smoothly for RGEN in the
first half of 2021
Key
points: RGEN is approaching its two-year anniversary in the AIM
Small-Cap portfolio in a couple of weeks, and it is safe to say that this stock
has been a winner. It has provided over 250% of returns since its addition into
the small cap fund, and has had a stellar performance thus far in 2021. YoY
it’s revenue in Q2 has risen 69% and EPS increasing over 128%. They have
continuously made strategic acquisitions that have added great value to the
company. And not only are they investing in other companies to help grow, RGEN
has recently signed a new lease for a 64,000 square foot facility in
Massachusetts and are building a 33,000 square foot LEAD Silver certified
building in Ireland. These Capital Expenditures are to help keep up production
with such a high demand for their products, signaling the company is still
going strong.
Their most recent acquisition
occurred at the end of the first quarter. On June 22nd, 2021, RGEN
announced their acquisition of Polymem. Polymem is a private company in
Toulouse, France. The company was founded in 1997 and is the only French
manufacturer of hollow fiber membranes for water treatment. In addition, they
also specialize in solid/liquid separation, gas separation, liquid/gas
transfer, and other bioprocessing applications. Before the acquisition, Polymem
was immerged in numerous markets including USA, Estonia, Germany, Ireland, the
Netherlands, and Sweden. This acquisition gives RGEN the opportunity to expand
their pipeline, tap into markets they have not reached yet, and expand their
presence in current markets. According the the Q2 earnings call, management
expects Polymem to add $3M in revenue in the second half of 2021.
On top of the Polymem
acquisition, RGEN has successfully finalized integrating their acquisitions
that were made in 2020. Engineered Molding Technology, ARTeSYN BioSolutions
Ireland, and Non-Metallic Solutions, Inc. were all announced in 2020, and
RGEN’s Q2 earnings call announced that they were satisfied with the first half
performance of 2021. Management emphasized that these companies have a great
fit in their bioprocessing business, and were enthused with the speed of the
integration. Management expects these acquisitions to contribute anywhere
between $43-46 million by the end of 2021.
What
has the stock done lately?
The stock is currently trading at
it’s all-time high at $286.17. Over the last 3 months, RGEN has risen nearly 61%,
which reflects the strong second quarter. They had a very solid performance in
the second quarter of 2021 with organic revenue increasing $75.5M YoY for Q2
and their EPS doubling. Also noted in the second quarter was a significant
margin expansion. All in all, this huge quarter for the company has boosted the
stock to it’s all time high.
Past Year Performance: RGEN has increased about 84% in value over the
last year, and is currently trading at its all time high. The 52-week high and
low of the stock is $138.00 – 286.75. With
the number of acquisitions RGEN has made over the last year and a half on top
of strong organic revenue growth, it is great to see this company wrap up Q3
and enter the last quarter of 2021 with strong momentum.
Repligen Corporation has been a
successful and clear leader in the bioprocessing technology field. With their
strong performance as of recently, my initial thought was sell the company from
our portfolio, collect our earnings, and create space for new winners to enter
the portfolio. However, once I read more into the company and saw all of the
moves RGEN has made with their recent acquisitions, I think there is a lot more
to come from Repligen. I recommend we hold RGEN in our AIM Small-Cap fund and
closely watch the newly added value of their recent acquisitions.
