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Expert Financial Analysis and Reporting

Repligen: Revenues for 2014 are Above Expectations and Guidance for 2015 is for Strong Growth (RGEN, Hold/ Buy, $23.84)

Repligen reported preliminary, unaudited revenue of $63-$63.5 million for 2014. Product revenues came in at $60 to $60.5 million which compared to previous guidance of $56 to $58 million. In addition, revenues from out-licensing of legacy biotechnology products added $3.0 million. This represents an increase in product revenues of 26%-27%. I estimate that the purchase acquisition of ATF in July added about $3.7 million of revenues. This suggests organic growth of product revenues in 2014 was still an impressive 19.5%. This compares to an increase of 14% for 2013 over 2012. Clearly the business is very strong. The stock price was up 20% or nearly $4.00 on the news.

The Company issued guidance for 2015 for product revenues of $69 to $72 million, which would be a 15% to 20% increase. The Company has a history of conservatism on guidance which suggests that they have a good chance of hitting this guidance. Part of this reflects the contribution of an estimated $8.5 million of revenues from ATF in 2015 versus an estimated $3.7 million in 2014. This indicates that growth of other areas of the business of perhaps 11% to 12% as viewed against an estimated 19.5% in 2014. This seems conservative. In addition, the Company is a cash machine and has been making one or more strategic acquisitions per year and I would not be surprised by a major acquisition in 2015 that would increase sales growth. This suggests that the 2015 revenue guidance has a good chance of being exceeded.

I love the business model of this Company and it is one of my significant biotechnology related holdings. The valuation of the stock has kept me from being an aggressive buyer of the stock, but you couldn’t pry this stock out of my portfolio with a crow bar.

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