The bioprocessing market is about to recover. That's the conclusion from Repligen's (RGEN 4.79%) second-quarter earnings report released earlier in the week and the reason for the stock's 17.7% ascendancy in the week to Friday morning.
Repligen and Danaher are seeing budding shoots of recovery
A positive view of Repligen's recovery is supported when examining Danaher's recent results, released a week earlier. Danaher is a much larger company selling life sciences and diagnostics platforms and consumables; however, its bioprocessing business attracted the most attention on the earnings call.
Danaher's bioprocessing revenue declined by high single digits in the quarter, and management still expects a low-single-digit decline for the full year. Still, management also said its bioprocessing core revenue would exit the year with a high-single-digit growth rate.
CEO Rainer Blair said Danaher's bioprocessing consumables orders are "back to normal." In addition, the growth of bioprocessing orders was positive for both equipment and consumables.
What about Repligen
Repligen's earnings and commentary followed suit. While there's still weakness in China, CEO Tony Hunt said orders outgrew revenue in both the second quarter and the first half. In concert with Danaher's market outlook, Hunt noted, "Sales and order momentum on consumables continued, and we saw a bounce back in equipment orders, both sequentially and year-over-year.
Image source: Getty Images.
It looks like customer destocking has worked through, and the bioprocessing industry is set to return to its long-term growth rate, driven by increasing demand for biologic drugs, which include the fast-growing field of monoclonal antibodies, vaccines (research budgets received a boost due to COVID-19 vaccine research), and gene therapies.
Trading on 115 times expected 2024 earnings, Repligen is not a superficially cheap stock, but it's operating in high-growth markets that are recovering in 2024.
