Ingrid Hendershot, CFA, founder and president of Hendershot Investments Inc., an investment management firm and editor of Hendershot Investments, newsletter regularly posts earnings estimates on companies held in portfolios. Companies reporting quarterly earnings are Regeneron Pharmaceuticals and Cognizant:

Regeneron Reports Strong First Quarter

Regeneron Pharmaceuticals (Nasdaq: REGN) reported a healthy 38% increase in first quarter revenues to $2.5 billion with net earnings surging 78% to $1.15 billion and EPS soaring 86%, on fewer shares outstanding, to $10.09. Adjusted EPS, which excludes unrealized gains and losses on investments and other items, increased 50% to $9.89.

First quarter revenues were boosted by $262.2 million in domestic sales of Regeneron’s antibody cocktail, REGEN-COV, approved for emergency use in the U.S. to treat non-hospitalized COVID-19 patients. The U.S. government has agreed to acquire up to 1.25 million additional doses at $2,100 per dose, resulting in payments of up to $2.625 billion in the aggregate.

Excluding sales of REGEN-COV, Regeneron delivered a 20% year-over-year revenue increase.

First quarter worldwide sales of products discovered by Regeneron included: Eylea, a leader in treatment for age-related macular degeneration and diabetic edema, with a 17% jump to $2.2 billion; Dupixent, a first-in-class treatment option for inflammatory diseases, surged 48% to $1.3 billion and recently approved Libtayo, now the standard of care for advanced cutaneous squamous cell carcinoma, generated sales of $101 million, up 35% from last year, with numerous new indications for the drug on the horizon.

During the quarter, Regeneron generated free cash flow of $668.5 million, down 4% from last year, and free cash flow of $553.2 million, up 5%, on lower capital expenditures.

The company repurchased 690,265 shares for $323.5 million, or $468.66 per average share. With $1.18 billion remaining under the current share repurchase program and a stock that, according Regeneron executives, trades below intrinsic value, the company remains active in repurchasing its shares.

Regeneron ended the quarter with $7.05 billion in cash and investments, $2 billion in long-term debt and nearly $12 billion in shareholders’ equity on its sturdy balance sheet.

Looking ahead to the full year, the company expects to generate gross margins of 86% to 88% on net product sales and to spend between $3 billion to $3.175 billion in research and development. Company website: www.regeneron.com.

Source: Ingrid Hendershot, CFA is the founder and president of Hendershot Investments Inc., an investment management firm. She is also the editor of Hendershot Investments, a quarterly investment newsletter designed for long-term investors. The firm regularly posts earnings estimates on companies held in portfolios. www.hendershotinvestments.com.

Cognizant Reports First Quarter 2021 Results

Cognizant (Nasdaq: CTSH) reported first quarter revenues rose 4% to $4.4 billion with net income up 38% to $505 million and EPS up 42% to $.95.

Revenue growth was driven by digital revenue growth of 15% which now represents 44% of total revenue up from 39% in the prior year period.

Operating margin expanded to 15.2% during the quarter. Cognizant has over 200,000 associates working in India with the ongoing humanitarian crisis brought on by the pandemic deeply concerning. Cognizant has made a series of investments to support India during this time of need and continues to prioritize the health and safety of all their associates who continue to work from home.

Total employee attrition during the quarter was a high 21%, partly due to the pandemic but also due to the intensely competitive war for talent.

Cognizant is increasing its investments in recruiting and talent with a record 28,000 offers to new graduates. Free cash flow during the quarter declined 76% to $93 million reflecting payments of taxes that had been deferred due to the pandemic and increased cash incentives to associates.

During the quarter, Cognizant paid $128 million in dividends and repurchased $234 million of its common stock at an average price of $75.80 per share. Cognizant has $2.6 billion remaining authorized for future share repurchases. In addition, Cognizant spent about $340 million on acquisitions during the quarter to support future growth.

The company raised its outlook for sales for the full fiscal 2021 year to a range of $17.8 billion to $18.1 billion, representing 7%-9% growth, with adjusted EPS expected in the range of $3.90-$4.02. Company website: www.cognizant.com.

Source: Ingrid Hendershot, CFA is the founder and president of Hendershot Investments Inc., an investment management firm. She is also the editor of Hendershot Investments, a quarterly investment newsletter designed for long-term investors. The firm regularly posts earnings estimates on companies held in portfolios. www.hendershotinvestments.com.