Regeneron Pharmaceuticals Inc (NASDAQ:REGN) released its second-quarter earnings results today, with U.S. EYLEA sales of $831 million, above Street consensus of $811 milion. Management reiterated 2016 EYLEA sales guidance to 20-25% growth, however pointed to potential CMS headwinds.

Canaccord analyst John Newman commented: “Regeneron reported its Q2 earnings this morning with a beat on EYLEA sales, but increased patient support expenses are a sign for concern in our view. EYLEA currently commands a 37% share of the injectable anti-VEGF market, but increased expenditure suggests either 1) EYLEA is facing greater competition in the market or 2) Regeneron is rightly trying to get ahead of proposals by the CMS regarding Medicare Part B which could negatively impact EYLEA sales. Neither circumstance is particularly favorable, and should margins continue to shrink it may impact investor sentiment going forward.”

“Though seemingly a positive, we remind investors that Ophthotech is further down the clinical runway, with data from its Phase 3 wet AMD trial of Fovista +EYLEA/Avastin also expected in 4Q16. Negative data ahead of Ophthotech could lend credence to the idea that PDGF is not a valid target in wet AMD, whereas positive data could result in read-through that Ophthotech’s study may be positive,” the analyst added.

Given the points of concern, Newman reiterated a Hold rating on shares of Regeneron, with a price target of $450, which represents a slight upside potential from current levels.

As usual, we recommend taking analyst notes with a grain of salt. According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst John Newman has a yearly average return of -12.7% and a 33% success rate. Newman has a -2.4% average return when recommending REGN, and is ranked #3990 out of 4085 analysts.

Out of the 23 analysts polled by TipRanks, 11 rate Regeneron stock a Buy, 11 rate the stock a Hold and 1 recommends Sell. With a return potential of 11.4%, the stock’s consensus target price stands at $482.94.