Royalty Pharma Earnings: Solid Growth; Diverse Portfolio Supports Positive Long-Term Outlook

Narrow-moat Royalty Pharma’s fourth-quarter results largely tracked our expectations. Portfolio receipts for the quarter totaled $742 million, a 1% year-over-year increase. This growth was driven primarily by strong performance from key products including Evrysdi, the cystic fibrosis portfolio, Trelegy, Xtandi, and Tremfya. Royalty Pharma’s growth was tempered by a decline in milestone and other contractual receipts, notably a $50 million payment in the prior period related to the oral formulation of zavegepant. Despite this, the company’s core royalty receipt performance remained robust, bolstered by a diversified portfolio of leading biopharmaceutical products. We maintain our $47 fair value estimate.