Royalty Pharma plc (RPRX) | Investment Case

1. Company Snapshot

1.a. Company Description

Royalty Pharma plc operates as a buyer of biopharmaceutical royalties and a funder of innovations in the biopharmaceutical industry in the United States.It is also involved in the identification, evaluation, and acquisition of royalties on various biopharmaceutical therapies.In addition, the company collaborates with innovators from academic institutions, research hospitals and not-for-profits, small and mid-cap biotechnology companies, and pharmaceutical companies.

Its portfolio consists of royalties on approximately 35 marketed therapies and 10 development-stage product candidates that address various therapeutic areas, such as rare disease, cancer, neurology, infectious disease, hematology, and diabetes.The company was founded in 1996 and is based in New York, New York.

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1.b. Last Insights on RPRX

Royalty Pharma's recent performance was driven by strong Q3 2025 earnings, with portfolio receipts growth of 11% to $814 million and royalty receipts growth of 11%. The company raised its full-year 2025 guidance for portfolio receipts to $3,200-$3,250 million. A recent acquisition of a royalty interest in Alnylam's AMVUTTRA for $310 million expanded its portfolio. Additionally, the company's Investor Day highlighted its strong execution, upward guidance revision, and robust free cash flow growth, with management projecting 11-14% portfolio receipts CAGR through 2030.

1.c. Company Highlights

Last Price	39.73
Change Percentage	1.48%
Open	39.15
Previous Close	39.15
Market Cap ( Millions)	17247
Volume	4012775
Year High	41.24
Year Low	24.05
M A 50	37.67
M A 200	35.2

FCF Yield	14.32%
Dividend Yield	2.21%
ROE	15.20%
Debt / Equity	126.07%
Net Debt / EBIDTA	381.70%
Price To Book	2.71
Price Earnings Ratio	16.83
Price To FCF	6.98
Price To sales	7.48
EV / EBITDA	12.75

2. Royalty Pharma's Q3 2025 Earnings: Strong Execution and Growth

Royalty Pharma reported a robust third quarter, with 11% growth in both portfolio receipts and royalty receipts, driven by the strength of its diversified portfolio. The company's top line, portfolio receipts, reached $814 million, and its operating and professional costs equated to 4.2% of portfolio receipts. The earnings per share (EPS) came in at $1.17, beating estimates of $1.11. The company's return on invested capital was 15.7%, and return on invested equity was 22.9% for the last 12 months, demonstrating its ability to generate attractive returns.

Publication Date: Nov -09

                                    📋 Highlights
                                    11% Growth in Portfolio Royalty Receipts:
                                                Portfolio receipts rose 11% to $814 million in Q3 2025.
$1.7 Billion in Capital Deployed:
                                                $1 billion deployed in Q3, totaling $1.7 billion across first 9 months of 2025.
15.7% Return on Invested Capital:
                                                12-month ROI at 15.7%, with ROE at 22.9%.
$310 Million Amvuttra Royalty Acquisition:
                                                Post-quarter purchase of Alnylam’s Amvuttra royalty for $310 million.
Revised 2025 Guidance:
                                                Full-year portfolio receipts now projected at $3.2–$3.25 billion (14–16% growth).

                                

Deal Activity and Pipeline Expansion

The company continued to expand its pipeline, acquiring a royalty interest on Amgen's lung cancer drug, Imdelltra, for up to $950 million, and entering into a funding agreement for up to $300 million with Zenas Biopharma for its development-stage autoimmune drug obexelimab. Since the quarter ended, Royalty Pharma acquired a royalty on Alnylam's Amvuttra for $310 million, further expanding its pipeline to 17 therapies. As Christopher Hite noted, the company only considers development-stage investments if there is a compelling proof-of-concept data in an area of unmet patient need, and if the range of commercial scenarios modeled supports returns in the teens or better.

Financial Guidance and Outlook

Royalty Pharma raised its full-year 2025 top-line guidance to between $3.2 billion and $3.25 billion, representing growth of around 14% to 16%. The company also provided insight into its 2026 outlook, highlighting minimal royalties from Promacta due to generic launches and anticipated interest payments of $350-360 million. Analysts estimate next year's revenue growth at 4.4%, which is relatively modest compared to the company's historical growth rate.

Valuation and Metrics

Using the current price-to-earnings (P/E) ratio of 16.33 and enterprise value-to-EBITDA (EV/EBITDA) ratio of 12.45, we can assess what's priced into Royalty Pharma's stock. The company's return on invested capital (ROIC) of 10.16% and return on equity (ROE) of 15.2% indicate a strong ability to generate returns. With a dividend yield of 2.26% and free cash flow yield of 14.81%, the stock appears to offer an attractive combination of income and growth potential.

3. NewsRoom

Royalty Pharma and Denali Therapeutics Announce $275 Million Royalty Funding Agreement

Dec -04

Source: globenewswire.com

Denali Therapeutics and Royalty Pharma Announce $275 Million Royalty Funding Agreement

Dec -04

Source: globenewswire.com

Royalty Pharma plc (RPRX) Presents at Evercore 8th Annual Healthcare Conference Transcript

Dec -03

Source: seekingalpha.com

Royalty Pharma plc (RPRX) Presents at Citi Annual Global Healthcare Conference 2025 Transcript

Dec -02

Source: seekingalpha.com

Creative Planning Buys 9,718 Shares of Royalty Pharma PLC $RPRX

Nov -27

Source: defenseworld.net

Royalty Pharma to Present at Upcoming Investor Conferences

Nov -26

Source: globenewswire.com

Royalty Pharma PLC $RPRX Stake Reduced by Envestnet Asset Management Inc.

Nov -16

Source: defenseworld.net

Royalty Pharma: Guidance Raised Again, Platform Strength Intact -- Buy Reiterated

Nov -15

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (14.00%)

6. Segments

Biopharmaceutical Royalties

Expected Growth: 14%

Strong pipeline of approved and pending products, increasing demand for rare disease treatments, and strategic partnerships driving licensing agreements. Growing importance of biopharmaceuticals in healthcare, rising R&D investments, and favorable regulatory environment also contribute to the 14% growth.

7. Detailed Products

Trevicta

A treatment for epilepsy and partial onset seizures

Tymlos

A treatment for osteoporosis in postmenopausal women

Evomela

A treatment for multiple myeloma and lymphoma

Methazolamide

A treatment for glaucoma and epilepsy

Orfadin

A treatment for hereditary tyrosinemia type 1 (HT-1)

Royalty streams

A financial product providing a steady stream of revenue

8. Royalty Pharma plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Royalty Pharma plc has a moderate threat of substitutes due to the presence of alternative pharmaceutical companies and generic drug manufacturers.

Bargaining Power Of Customers

Royalty Pharma plc has a low bargaining power of customers due to its strong brand recognition and limited customer concentration.

Bargaining Power Of Suppliers

Royalty Pharma plc has a moderate bargaining power of suppliers due to its dependence on a few key suppliers for raw materials and manufacturing services.

Threat Of New Entrants

Royalty Pharma plc has a high threat of new entrants due to the increasing trend of pharmaceutical companies acquiring or partnering with royalty-based companies.

Intensity Of Rivalry

Royalty Pharma plc operates in a highly competitive industry with intense rivalry among pharmaceutical companies, which can lead to pricing pressures and reduced market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	48.46%
Debt Cost	4.57%
Equity Weight	51.54%
Equity Cost	6.30%
WACC	5.46%
Leverage	94.01%

11. Quality Control: Royalty Pharma plc passed 4 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Royalty Pharma

A-Score: 6.2/10

Value: 4.9

Growth: 3.8

Quality: 7.4

Yield: 4.0

Momentum: 8.5

Volatility: 9.0

1-Year Total Return ->

Exelixis

A-Score: 5.8/10

Value: 3.4

Growth: 7.9

Quality: 9.2

Yield: 0.0

Momentum: 9.5

Volatility: 5.0

1-Year Total Return ->

Corcept Therapeutics

A-Score: 4.8/10

Value: 0.3

Growth: 8.0

Quality: 8.8

Yield: 0.0

Momentum: 10.0

Volatility: 1.7

1-Year Total Return ->

Novavax

A-Score: 3.9/10

Value: 7.1

Growth: 5.4

Quality: 7.2

Yield: 0.0

Momentum: 2.5

Volatility: 1.3

1-Year Total Return ->

Arcellx

A-Score: 3.9/10

Value: 6.0

Growth: 5.7

Quality: 5.0

Yield: 0.0

Momentum: 3.0

Volatility: 4.0

1-Year Total Return ->

Alpine Immune Sciences

A-Score: 3.8/10

Value: 6.0

Growth: 6.6

Quality: 4.0

Yield: 0.0

Momentum: 5.0

Volatility: 1.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-7.75%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.46%

Royalty Pharma plc - GB00BMVP7Y09

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on RPRX

1.c. Company Highlights

Higher Yield

Less Volatile

Better Quality

Earnings Beats

Revenues Miss

Fairly Valued

Expensive

Earnings Miss

Revenues Beats

Strong Momentum

2. Royalty Pharma's Q3 2025 Earnings: Strong Execution and Growth

Deal Activity and Pipeline Expansion

Financial Guidance and Outlook

Valuation and Metrics

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (14.00%)

6. Segments

Biopharmaceutical Royalties

Expected Growth: 14%

7. Detailed Products

Trevicta

Tymlos

Evomela

Methazolamide

Orfadin

Royalty streams

8. Royalty Pharma plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Royalty Pharma plc passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

39.73$

Current Price

39.73$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA