We recently published a list of Jim Cramer’s Lightning Rounds: 12 Stocks Under the Spotlight. In this article, we are going to take a look at where Regeneron (NASDAQ:REGN) stands against other stocks under Jim Cramer’s lightning rounds’ spotlight.
Jim Cramer, host of Mad Money, recently discussed the outlook for the stock market following a year of strong gains, cautioning that investors’ overly optimistic expectations for Federal Reserve rate cuts could lead to trouble. As the year draws to a close, brokerages are releasing their official market predictions for 2025, and so far, they are almost universally positive.
He said that this optimism is understandable given the strong earnings season and the significant stock market rally following the election. Cramer noted that many investors are betting that a business-friendly administration will continue to drive better returns.
“See, after all these gains, you gotta get a little squeamish, don’t you? Unless something drastic happens in the next few weeks, we’re in line for our second straight year of 20% plus returns for the S&P 500. First time that’s happened since 1999, ooh, not the best precedent. Plus, the market’s gotten really expensive by historical standards.”
READ ALSO: Jim Cramer Discussed 10 Stocks That Can Do Well in December and Jim Cramer’s Lightning Round: 7 Stocks to Watch
Cramer said that his main worry is that Wall Street may have gotten ahead of itself, with too many investors expecting more rate cuts from the Federal Reserve than are realistically likely. He highlighted the unusual situation that has unfolded since the Fed’s surprise double rate cut in September. While short-term interest rates have come down, long-term rates set by the bond market have actually risen, creating a stark contrast. He remarked:
“The market’s betting on a December rate cut. Anything that derails that will be bad news for the averages.”
When looking ahead to 2025, Cramer noted a significant lack of consensus about future rate cuts. He pointed to Fed funds futures for December 2025, which show a wide range of predicted outcomes. Investors are betting on anywhere from zero to eight rate cuts by then, with the most likely scenario being three cuts by the end of 2025.
Cramer explained that while he thinks three rate cuts sound reasonable, it also suggests that roughly 41% of the market is anticipating too many cuts over the next year, a scenario that could disappoint many money managers.
“So here’s the bottom line: Given all the success we’ve had in this market, we need to guard against complacency and that’s why I’m flagging my biggest worry that the market might be getting too aggressive with its expectations for rate cuts over the next year.”
Our Methodology
For this article, we compiled a list of 12 stocks that were discussed by Jim Cramer during recent episodes of Mad Money. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN)
Number of Hedge Fund Holders: 62
Cramer noted that Regeneron Pharmaceuticals, Inc.’s (NASDAQ:REGN) sales did not live up to his expectations and said:
“Regeneron’s a quandary. I’ve gotta tell you, I expected sales to be better, they’re not. I don’t wanna give up on a stock down at $749, but I do prefer Eli Lilly even at $900 because you know, I think that $900 is the next stop for Lily at $813. I’m not sure what the next stop is for Regeneron.”
Regeneron (NASDAQ:REGN) develops and commercializes medicines for a variety of conditions. It also focuses on developing new treatments for a range of medical conditions. In the third quarter, the company’s higher-dose version of EYLEA, called EYLEA HD, underperformed in terms of quarterly sales.
For the quarter, EYLEA HD generated $392 million in sales, falling short of expectations for the second consecutive quarter. However, the company noted that net sales of EYLEA were positively impacted by an increase in wholesaler inventory levels for EYLEA HD at the end of the third quarter, contributing an additional $40 million in revenue. Despite this, management anticipates that EYLEA HD sales in the fourth quarter will be negatively affected as wholesalers absorb this inventory boost.
It should be noted that Regeneron (NASDAQ:REGN) management remains optimistic about the potential for EYLEA HD, particularly after its first year on the market. Marion McCourt, executive vice president of commercial, pointed out that positive feedback from both physicians and patients has helped EYLEA HD achieve billion-dollar brand status, signaling strong growth potential for the drug moving forward.
Overall, REGN ranks 1st on our list of stocks under Jim Cramer’s lightning rounds’ spotlight. While we acknowledge the potential of REGN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than REGN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.