On May 24, 2023, Pablo Legorreta, CEO, Chairman of the Board, and 10% Owner of Royalty Pharma PLC (RPRX, Financial), purchased 150,000 shares of the company. This move is significant as it indicates a strong vote of confidence in the company's future prospects. In this article, we will take a closer look at who Pablo Legorreta is, Royalty Pharma PLC's business, and analyze the relationship between insider buying/selling and the stock price.
Who is Pablo Legorreta?
Pablo Legorreta is the founder, CEO, and Chairman of the Board of Royalty Pharma PLC. He has been with the company since its inception in 1996. Under his leadership, Royalty Pharma has grown to become a leading funder of innovation in the biopharmaceutical industry, with a focus on acquiring royalty interests in marketed and late-stage biopharmaceutical products. Legorreta's extensive experience and deep understanding of the industry have been instrumental in the company's success.
Royalty Pharma PLC's Business Description
Royalty Pharma PLC is a leading global investor in biopharmaceutical royalties. The company acquires royalty interests in marketed and late-stage biopharmaceutical products, providing capital to fund innovation in the industry. Royalty Pharma's diversified portfolio includes royalties on some of the world's best-selling therapies, covering various therapeutic areas such as oncology, neurology, and rare diseases. The company's unique business model allows it to participate in the success of innovative therapies without bearing the risks and costs associated with drug development.
Analysis of Insider Buying/Selling and Stock Price Relationship
Over the past year, Pablo Legorreta has purchased a total of 380,000 shares and sold 0 shares. This indicates a strong conviction in the company's prospects and potential for growth. The insider transaction history for Royalty Pharma PLC shows a total of 2 insider buys and 37 insider sells over the past year. While the number of insider sells is significantly higher than insider buys, it is essential to consider the context and reasons behind these transactions.
On the day of Legorreta's recent purchase, shares of Royalty Pharma PLC were trading at $32.25 apiece, giving the stock a market cap of $14,512.682 million. The price-earnings ratio is 103.78, which is higher than the industry median of 30.55 and higher than the company's historical median price-earnings ratio. This suggests that the stock may be overvalued compared to its peers and historical performance.
However, with a price of $32.25 and a GuruFocus Value of $38.49, Royalty Pharma PLC has a price-to-GF-Value ratio of 0.84. This means the stock is considered modestly undervalued based on its GF Value. The GF Value is an intrinsic value estimate developed by GuruFocus, calculated based on historical multiples, a GuruFocus adjustment factor, and future estimates of business performance from Morningstar analysts.
Conclusion
The recent insider buying by Pablo Legorreta, CEO, Chairman of the Board, and 10% Owner of Royalty Pharma PLC, is a positive signal for the company's future prospects. Despite the stock's high price-earnings ratio, the modestly undervalued price-to-GF-Value ratio suggests potential for growth. Investors should keep a close eye on Royalty Pharma PLC and consider the insider buying activity as a factor in their investment decisions.
