Should You Buy Royalty Pharma Stock Before Nov. 4?
Key Points
Royalty Pharma shares have surged ahead of the biotech funding company's Nov. 4 quarterly earnings release.
It's unclear whether the company will knock it out of the park this quarter, as was the case with Q2 2026.
Further success at funding and monetizing new drugs could enable shares to re-rate to a higher valuation.
- 10 stocks we like better than Royalty Pharma Plc ›
Royalty Pharma (NASDAQ: RPRX) will report Q3 2026 earnings pre-market on Nov. 4. After pulling back in September due to a major setback with one of its drug candidates, the pharmaceutical royalty holding company's shares have been soaring back toward their 52-week high.
Yet while this may tempt you to speculate on a post-earnings rally, remember to keep the long term in mind with this stock. Earnings day may not necessarily catalyze share price action, but there's still reason to remain bullish on Royalty's long-term prospects.
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Royalty Pharma earnings preview
Analyst forecasts call for Royalty Pharma to report 8.7% sales growth and essentially zero earnings growth for the quarter ended Sept. 30. However, the sell side has been upwardly revising its forecasts ever since the company reported earnings in August. At the time, Royalty Pharma, which funds new drug development in exchange for royalty interests and other considerations, reported strong results, including 14% growth in royalty receipts.
Given the nature of its business, investors perceive the company as having "lumpy" results. Based on analyst forecasts, Wall Street appears to expect Royalty Pharma to report steady royalty revenue but fewer one-time milestone payments.
Stay focused on the long-term bull case
Alongside the results themselves, updates on key candidates, such as cancer treatments JNJ-4804 and daraxonrasib, under development by Johnson & Johnson and Revolution Medicines, respectively, could trigger a positive reaction from the market. Upbeat news on other drug candidates could help outweigh recent pessimism about underwhelming results with pelacarsen, under development by Novartis.
On the other hand, further negative pipeline news and/or any guidance walk back in the Nov. 4 earnings release could also lead to a bearish response to earnings. That said, if the company can continue to generate double-digit returns from its drug development funding, as well as smooth out its earnings, to the point where it experiences steady growth rather than "lumpy" results, the stock, trading for around 12 times forward adjusted earnings, could move to a mid-to-high teens forward multiple, in line with the valuation of larger, more established biotech stocks.
Should you buy stock in Royalty Pharma Plc right now?
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Thomas Niel has no position in any of the stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
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