Royalty Pharma (RPRX) AI Stock Analysis

• Market Cap: $20.44B
• Dividend Yield: 2.48%
• Average Volume (3M): 5.07M
• Price to Earnings (P/E): 15.3
• Beta (1Y): 0.23
• Revenue Growth: 3.04%
• EPS Growth: 53.03%
• Country: US
• Employees: 75
• Sector: Healthcare
• Sector Strength: 45
• Industry: Biotechnology
• EPS (TTM): 1.14
• Shares Outstanding: 432,293,060
• 10 Day Avg. Volume: 7,366,584
• 30 Day Avg. Volume: 5,073,625
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.51
• Enterprise Value/Revenue: 13.36
• Enterprise Value/Gross Profit: 13.36
• Enterprise Value/Ebitda: 15.95
• 1Y Price Target: $44.00
• Price Target Upside: 25.57% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

• Rating: 73 Outperform
• Price Target: $40.00 ▲(14.16% Upside)

Royalty Pharma's overall stock score is driven by strong financial performance and positive earnings call outcomes, including increased guidance and strategic partnerships. However, technical indicators suggest a neutral market sentiment, and valuation metrics indicate reasonable pricing. The Vertex royalty dispute and one-time expenses are notable risks.

Positive Factors

Strategic Partnerships

The partnership with Revolution Medicines enhances Royalty Pharma's portfolio, providing potential for significant future royalties and strengthening its position in oncology.

Revenue Growth

The raised guidance indicates strong expected revenue growth, reflecting successful royalty acquisitions and effective business strategy execution.

Operational Efficiency

Improved cost efficiency enhances profitability and cash flow, supporting sustainable growth and competitive advantage in the long term.

Negative Factors

Profitability Challenges

Decreasing net profit margins indicate challenges in maintaining profitability, which could impact financial health if not addressed.

Vertex Royalty Dispute

The ongoing royalty dispute with Vertex could impact expected cash flows and highlights potential risks in revenue predictability.

Free Cash Flow Growth

Slowing free cash flow growth could limit financial flexibility and investment capacity, affecting long-term strategic initiatives.

Royalty Pharma Business Overview & Revenue Model

Company Description

Royalty Pharma (RPRX) is a leading acquirer of pharmaceutical royalties, focusing on innovative medicines across various therapeutic areas, including oncology, infectious diseases, and neurology. The company specializes in purchasing royalty interests from biopharmaceutical companies and investors, allowing them to monetize their future cash flows from approved drugs. By leveraging its expertise in drug development and commercialization, Royalty Pharma partners with a range of stakeholders in the pharmaceutical industry to maximize the value of their products.

How the Company Makes Money

Royalty Pharma generates revenue primarily through the acquisition of royalty rights from pharmaceutical companies, which entitles it to a percentage of sales from specific drugs. This model allows the company to benefit from the commercial success of these drugs without bearing the costs and risks associated with drug development. Key revenue streams include ongoing royalty payments from these partnerships, as well as milestone payments when drugs reach certain sales targets. Additionally, Royalty Pharma often enters into strategic agreements with biotech firms and pharmaceutical companies, enhancing its portfolio and revenue potential. The company's ability to identify and secure lucrative royalty agreements with high-value medications is a significant factor in its earnings, contributing to its steady cash flow and growth.

Royalty Pharma Financial Statement Overview

Summary

Royalty Pharma demonstrates strong operational efficiency with impressive gross margins and robust cash flow generation. However, challenges in net income growth and profitability impact the overall financial health. Despite moderate leverage and strong equity levels, the company should focus on enhancing profitability to improve financial performance.

Income Statement

The income statement shows stable revenue with a slight decline over the TTM period compared to previous years. Gross profit margins remain strong, over 99%, indicating efficient cost management. However, the net profit margin has decreased due to higher expenses relative to revenue. The EBIT and EBITDA margins show strong operational efficiency, though the decline in net income suggests some profitability challenges.

Balance Sheet

The balance sheet indicates a moderate debt-to-equity ratio, suggesting manageable leverage levels. The equity ratio is stable, supporting financial stability. However, the return on equity (ROE) fluctuates due to varying net income, highlighting potential profitability issues. Overall, the company maintains a solid asset base with appropriate equity levels.

Cash Flow

Cash flows are robust, with strong operating cash flow relative to net income, indicating efficient cash generation from operations. The free cash flow remains positive, supporting financial flexibility. However, the free cash flow growth rate has slowed, suggesting a need for future improvements in cash flow generation to sustain growth.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.31B	2.26B	2.35B	2.24B	2.29B	2.12B
Gross Profit	2.31B	2.26B	2.35B	2.24B	2.29B	0.00
EBITDA	1.93B	1.56B	1.89B	423.69M	1.43B	1.88B
Net Income	1.02B	858.98M	1.13B	42.83M	619.73M	975.04M
Balance Sheet
Total Assets	18.32B	18.22B	16.38B	16.81B	17.52B	16.02B
Cash, Cash Equivalents and Short-Term Investments	1.49B	1.77B	1.23B	2.43B	2.80B	2.65B
Total Debt	8.00B	7.61B	6.14B	7.12B	7.10B	5.82B
Total Liabilities	8.82B	7.88B	6.30B	7.29B	7.27B	6.12B
Stockholders Equity	6.35B	6.95B	6.53B	5.63B	5.78B	4.82B
Cash Flow
Free Cash Flow	2.47B	2.77B	2.99B	2.14B	2.02B	2.03B
Operating Cash Flow	2.47B	2.77B	2.99B	2.14B	2.02B	2.03B
Investing Cash Flow	-1.56B	-2.68B	-2.07B	-1.03B	-1.87B	-2.76B
Financing Cash Flow	-2.04B	361.14M	-2.15B	-944.86M	385.11M	1.49B

Royalty Pharma Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 35.04
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RPRX, the sentiment is Negative. The current price of 35.04 is below the 20-day moving average (MA) of 35.97, below the 50-day MA of 36.22, and above the 200-day MA of 32.70, indicating a neutral trend. The MACD of -0.21 indicates Positive momentum. The RSI at 42.04 is Neutral, neither overbought nor oversold. The STOCH value of 24.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RPRX.

Royalty Pharma Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GMAB	82 Outperform	$17.80B	14.40	22.13%	―	23.25%	64.46%
INCY	80 Outperform	$16.15B	18.80	20.88%	―	18.87%	1088.27%
UTHR	77 Outperform	$19.57B	16.89	18.55%	―	17.62%	19.89%
RPRX	73 Outperform	$20.44B	15.25	15.92%	2.48%	3.04%	53.03%
ASND	61 Neutral	$11.63B	-38.64	357.68%	―	55.77%	46.81%
BNTX	49 Neutral	$23.58B	-61.93	-1.88%	―	7.51%	30.53%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%

Royalty Pharma Corporate Events

Henry Fernandez Steps Down from Royalty Pharma Board

On August 13, 2025, Henry Fernandez stepped down from his role as Lead Independent Director of Royalty Pharma‘s Board of Directors. Fernandez, who joined the board in July 2020 and was appointed Lead Independent Director in March 2021, has been credited with helping the company achieve significant milestones and positioning it for future growth. His departure was not due to any disagreements with the company, and the board expressed gratitude for his contributions. Royalty Pharma plans to appoint a new Lead Independent Director soon.

Royalty Pharma Strengthens Board with New Appointments

On July 17, 2025, Royalty Pharma announced the appointment of Carole Ho and Elizabeth Weatherman to its Board of Directors, enhancing its corporate governance with over 90% independent representation. This move underscores the company’s commitment to governance following its acquisition of an external manager. Both appointees bring extensive experience in biopharma and finance, expected to support Royalty Pharma’s growth strategy and strengthen its board with their unique insights.