BofA Securities has maintained its Buy recommendation and a $54.00 price target on Royalty Pharma (NASDAQ: RPRX) following the company's fourth-quarter financial results. The $54 target equates to approximately a 22% premium versus the company's then-current share price of $44.25. Analyst targets on the stock span a range from $45 to $61, and the shares are trading close to a 52-week high of $45.24 after returning 40.28% over the past 12 months.
Quarterly performance and drivers
Royalty Pharma reported portfolio receipts of $874 million for the quarter, beating BofA's internal estimate by 4% and consensus expectations by 3%. BofA attributed the upside largely to stronger-than-expected results from growth products, naming the cystic fibrosis franchise, Trelegy, and Tremfya, as well as contributions from recent launches such as Voranigo. For the year, the company recorded revenue of $2.38 billion and reported a gross profit margin of 112.45%.
On the earnings front, the company reported fourth-quarter EPS of $1.47, ahead of analyst forecasts of $1.25, a 17.6% positive surprise. The reported quarterly revenue of $874 million also exceeded the street expectation of $796.14 million by 9.78%.
Guidance and analyst outlook
Royalty Pharma provided fiscal year 2026 royalty receipt guidance of $3.275 billion to $3.425 billion, which represents roughly 3% year-over-year growth at the midpoint. That midpoint aligns with BofA's projection of $3.35 billion and is modestly above consensus estimates of $3.2 billion. Analysts covering the name model EPS of $6.26 for fiscal 2026.
BofA characterized the 2026 guidance as relatively conservative, flagging several cautious assumptions that appear to be embedded in management's outlook. Those considerations include uncertainty around Vertex cystic fibrosis royalties, the potential for generics erosion for Promacta, biosimilar competition to Tysabri, and possible impacts tied to the Inflation Reduction Act.
Capital deployment, dividend and financial health
During 2025, Royalty Pharma invested about $2.6 billion across eight separate transactions spanning nine products. BofA expects a comparable pace of deployments in 2026 and continues to view the firm's core royalty business as solid, with opportunity for upside from additional royalty asset acquisitions.
On the shareholder return front, Royalty Pharma has lifted its dividend for six consecutive years. Over the last 12 months the dividend grew by 11.9%, and the stock currently yields 2.12%.
Separately, InvestingPro data assigns Royalty Pharma a "GREAT" overall financial health score of 3.15, with particularly strong marks in profitability (4.45) and price momentum (3.95).
Market reaction and context
Despite the solid earnings and revenue beats, the company's premarket trading showed a small decline in the share price, indicating that market response to the results and guidance was mixed in the short term. The combination of beat-driven fundamentals and conservative forward guidance is framing analyst discussions about the stock's near-term trajectory.
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