Alkermes stock holds Buy rating with $27 target from TD Cowen

Tuesday, Alkermes (NASDAQ: NASDAQ:ALKS), currently trading at $27.30 with a market capitalization of $4.49 billion, maintained a Buy rating and a $27.00 price target from TD Cowen, as the firm’s analyst Joseph Thome gave a positive outlook on the company’s prospects. According to InvestingPro, the company maintains a "GREAT" financial health score of 3.53, supported by strong balance sheet metrics. Thome highlighted the potential of the narcolepsy and idiopathic hypersomnia markets, which currently generate over $2 billion in annual branded drug revenues. He projected that these markets could grow to more than $6 billion with the approval of new treatments, particularly noting the promise of the orexin 2 receptor agonist class.

Alkermes, along with other key players such as AXSM, CNTA, JAZZ, and TAK, is well-positioned in the sleep disorder market, according to Thome. While the company’s revenue showed a 6.36% decline in the last twelve months to $1.56 billion, he emphasized the strong efficacy data provided by the orexin class and mentioned that increased diagnosis rates could significantly expand the market size.

Thome also pointed out that Alkermes’ ALKS 2680, an investigational drug for sleep disorders, has shown efficacy that has been "de-risked" according to feedback from key opinion leaders (KOLs). These KOLs support the company’s approach to studying various doses in clinical trial designs, which could offer a balance between efficacy, orexin tone, and tolerability for patients.

The analyst expressed confidence in Alkermes’ competitive position in the race to address narcolepsy types 1 and 2, as well as idiopathic hypersomnia (IH). He suggested that a once-daily (QD) treatment option that manages patients effectively, assuming insomnia is manageable, would be well-received in the market.

TD Cowen’s continued endorsement of Alkermes stock reflects an optimistic view of the company’s role in developing therapies for sleep disorders and its potential to capitalize on a growing therapeutic market. InvestingPro analysis reveals additional strengths, including strong shareholder yield and robust cash flow coverage. Subscribers can access 13 more exclusive ProTips and a comprehensive research report that provides deep insights into Alkermes’ financial health and growth prospects.

In other recent news, Alkermes reported a strong fourth-quarter performance, surpassing expectations with total revenues of $430 million, compared to the consensus estimate of $356 million. The company’s non-GAAP EPS also exceeded projections, coming in at $1.04 against the expected $0.72. Despite Lybalvi generating $77 million in revenue, slightly below the $80 million consensus, the company provided an optimistic 2025 guidance with an EBITDA range of $215 million to $245 million. Analysts from Jefferies maintained a Buy rating with a $41 price target, citing confidence in Alkermes’ achievable guidance and upcoming clinical readouts.

Goldman Sachs raised its price target for Alkermes from $30 to $32, maintaining a Buy rating, emphasizing the company’s successful fourth-quarter results and promising pipeline, particularly the Orexin agonist. RBC Capital Markets initiated coverage with a Sector Perform rating and a $40 price target, noting the potential of Alkermes’ orexin antagonist for narcolepsy treatment, despite challenges in the competitive market. Cantor Fitzgerald reaffirmed its Overweight rating with a $43 target, highlighting the stock’s attractiveness for long-term investors and the potential for significant pipeline expansion.

In other developments, Alkermes announced the passing of its CFO, Iain M. Brown, who had been on medical leave since February 2024. Blair C. Jackson and Samuel J. Parisi will continue as interim principal financial officer and interim principal accounting officer, respectively, as the search for a new CFO progresses. The company’s strategic initiatives and upcoming milestones continue to draw attention from investors and analysts.

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