Royalty Pharma PLC (RPRX) Hits Fresh High: Is There Still Room to Run?

A strong stock as of late has been Royalty Pharma (RPRX). Shares have been marching higher, with the stock up 4.8% over the past month. The stock hit a new 52-week high of $58.84 in the previous session. Royalty Pharma has gained 50% since the start of the year compared to the 1.7% move for the Zacks Medical sector and the 5.8% return for the Zacks Medical - Biomedical and Genetics industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on May 6, 2026, Royalty Pharma reported EPS of $1.3 versus consensus estimate of $1.22.

For the current fiscal year, Royalty Pharma is expected to post earnings of $5.06 per share on $3.44 in revenues. This represents a 4.76% change in EPS on a 5.6% change in revenues. For the next fiscal year, the company is expected to earn $5.52 per share on $3.68 in revenues. This represents a year-over-year change of 9.04% and 7.03%, respectively.

Valuation Metrics

Royalty Pharma may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Royalty Pharma has a Value Score of B. The stock's Growth and Momentum Scores are C and A, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 11.5X current fiscal year EPS estimates, which is not in-line with the peer industry average of 20.5X. On a trailing cash flow basis, the stock currently trades at 12.1X versus its peer group's average of 14.7X. Additionally, the stock has a PEG ratio of 1.59. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this is even more important than the company's VGM Score. Fortunately, Royalty Pharma currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Royalty Pharma passes the test. Thus, it seems as though Royalty Pharma shares could have potential in the weeks and months to come.

How Does RPRX Stack Up to the Competition?

Shares of RPRX have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Fortrea Holdings Inc. (FTRE). FTRE has a Zacks Rank of #1 (Strong Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of D.

Earnings were strong last quarter. Fortrea Holdings Inc. beat our consensus estimate by 433.33%, and for the current fiscal year, FTRE is expected to post earnings of $0.80 per share on revenue of $2.61 billion.

Shares of Fortrea Holdings Inc. have gained 4.7% over the past month, and currently trade at a forward P/E of 21.98X and a P/CF of 1.78X.

The Medical - Biomedical and Genetics industry is in the top 44% of all the industries we have in our universe, so it looks like there are some nice tailwinds for RPRX and FTRE, even beyond their own solid fundamental situation.

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This article originally published on Zacks Investment Research (zacks.com).

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