RBC sees buying opportunity following Regeneron’s ‘overdone DOJ downside’

RBC Capital notes that the Department of Justice has filed a complaint against Regeneron, accusing the company of fraudulently inflating Medicare reimbursement rates for Eylea. While the firm does not know what the exact damages would be in case of potential settlement, given the complaint highlighting $250M in reimbursement for potentially the largest of the five distributors during 2012-2021, it thinks treble damages across distributors + $10k fine per claim could be sizable — possibly in the multi-billion-dollar range. Shares had already been coming down to increasingly attractive levels of late, notes the firm, which views the underperformance as a buying opportunity as the stock continues to look undervalued on strong dupi fundamentals and cancer/obesity pipeline optionality. RBC has an Outperform rating on Regeneron with a price target of $1,189 on the shares.