Trade: Buy REGN June $700/$850 bull call spread. Aim for an entry around $78-79 in debit. Maximum profit is ~$71-$72. The maximum loss is the premium paid. The risk/reward is approximately 1:1 if the stock is shorted before expiration. Approval of Regeneron Inc.’s (REGN) Dupixent, the cancer drug limbosertamab, another cancer drug, odoroncustamab, and possibly the ongoing COURAGE obesity study could give the Tarrytown, N.Y.-based biotech company a catalyst-rich pipeline to offset competitive risks in other areas. The stock needed to consolidate after breaking well above its 150-day moving average in a bullish-to-bearish reversal. That trend has been going on since late 2025, and it may now be poised to resume recovery. At about $765 as I write this, and up about 60% over the past seven months, REGN may have taken its breath away as it remains well below its 2025 high of over $1,100. There are two triggers between now and the option expiration in June. The first is earnings, which will be announced on April 29th. The company’s annual general meeting is scheduled for early June. This is a story about pipeline options hidden within the cash flow machine. The expected free cash flow yield for fiscal year 2026 is greater than 6%. Dupixent is expected to reach global sales of $17.8 billion in 2025, is currently approved for eight indications, and its recent entry into the COPD market opens up new multi-billion dollar growth opportunities. Meanwhile, EYLEA HD is converting some of its traditional Eylea franchise volume in the US, otherwise under threat from Roche (RHHBY) Vabysmo. Currently, Eylea holds close to 60% share in this category. Perhaps the most important topic in the pharmaceutical industry at the moment is obesity drugs. Here, Regeneron lags behind Eli Lilly and Novo Nordisk. Although still in the mid-stages (perhaps 5 years from now), the shortcomings of competitors’ GLP-1 may not yet be well understood or widely publicized. One known drawback is muscle loss. Regeneron’s products aim to combine weight loss with muscle preservation. People who are skeptical about stocks aren’t wrong, but they may be focusing too much on one issue. The erosion of legacy Eylea by biosimilars is real, and forecasts for the franchise in 2026 have been significantly lowered. According to Bloomberg, if recent trends continue, Roche’s products could surpass Iry’s in market share by 2027. However, the bearish narrative appears to be priced in. Even with a growing underlying business and significantly reduced pipeline risk, Regeneron trades at around 16-17 times forward earnings, well below its mid-2024 high of $1,100. The fiscal year 2026 revenue forecast of $15.7 billion, if met, would represent a 9.5% year-over-year increase, a win considering Eyrie’s headwinds. Assuming the company meets street estimates, it would trade at more than 17 times estimated FY2026 adjusted EPS and less than 15 times the FY2027 consensus of $52.50 per share. The June $700/$850 bull call spread shown below allows you to participate in the P&L of 100 shares worth of REGN with defined risk. Disclosure: None. All opinions expressed by CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, its parent or affiliates, and may have been previously disseminated on television, radio, the Internet, or another medium. The above is subject to our Terms of Use and Privacy Policy. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. The content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor. Click here for full disclaimer.
