Should You Buy Royalty Pharma Stock Before Nov. 4?
Don't expect earnings day to sustain the stock's recent rally.
On November 4, Royalty Pharma (RPRX) will release its Q3 2026 earnings report. After a September setback due to a major drug candidate issue, the stock has been on an upward trajectory, nearing its 52-week high. While this may make some consider speculating on a post-earnings rally, it's important to maintain a long-term perspective with this stock.
Although earnings day might not directly drive share price action, there are still reasons to remain bullish on Royalty Pharma's long-term potential. Analysts predict an 8.7% sales growth and essentially zero earnings growth for the quarter ending September 30. However, these forecasts have been gradually revised upwards since August, when Royalty Pharma reported solid results, including a 14% increase in royalty receipts.
Given its business model, investors see the company as prone to "lumpy" results. Analysts anticipate steady royalty revenue but fewer one-time milestone payments. Positive news on key drug candidates, such as cancer treatments from Johnson & Johnson and Revolution Medicines, as well as other Royalty Pharma drug candidates, may lead to a positive market reaction.
Conversely, negative pipeline news or an earnings release that under-delivers could trigger a bearish response. If Royalty Pharma can maintain double-digit returns from its drug development funding and smooth out its earnings, trading at approximately 12 times forward adjusted earnings, the stock could potentially reach a mid-to-high teens forward multiple, comparable to more established biotech stocks.
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