Royalty Pharma Earnings: Diverse Portfolio Supports Stable Long-Term Performance; Shares Undervalued

Narrow-moat Royalty Pharma reported fourth-quarter earnings slightly above our expectations. We maintain our fair value estimate of $52 per share after updating our drug sales forecasts. Our capital deployment projection of $2.6 billion annually between 2024 and 2028 remains intact, and we continue to think the market is underappreciating Royalty Pharma's diverse portfolio that is resilient to headwinds certain portfolio drugs might face. After the Feb. 15 3% rally, the stock is still trading in 5-star territory.