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Investing.com - Barclays (LON:BARC) downgraded Sarepta Therapeutics (NASDAQ:SRPT) from Overweight to Equalweight and reduced its price target to $18.00 from $32.00 on Monday. The stock, currently trading at $13.32, has fallen over 90% in the past year and is hovering near its 52-week low of $12.60. According to InvestingPro analysis, the stock appears undervalued at current levels.
The downgrade follows escalating tensions between Sarepta and the FDA regarding a third patient death associated with the company’s AAVrh74 platform. Barclays noted that Sarepta’s decision not to disclose this death to the public triggered investor outcry. InvestingPro data shows broader analyst sentiment remains mixed, with a consensus recommendation of 2.62 and some analysts maintaining price targets as high as $110.
The FDA’s subsequent change in its regulatory approach was described as "disconcerting" by Barclays. Sarepta recently announced compliance with the FDA’s request to suspend drug delivery.
A policy expert consulted by Barclays estimated a 60-70% probability of Elevidys returning to market after temporary suspension. Had Sarepta not complied with the FDA request, the expert suggested a 90% likelihood of Health and Human Services Secretary involvement with a declaration of imminent safety concern.
Barclays indicated it would remain on the sidelines until regulatory clarity emerges, despite maintaining hope for opportunities in ambulatory patients.
In other recent news, Sarepta Therapeutics has faced significant regulatory challenges impacting its gene therapy programs. The U.S. Food and Drug Administration (FDA) placed a clinical hold on Sarepta’s investigational gene therapy trials for limb girdle muscular dystrophy (LGMD), affecting several programs, including SRP-9003. The company had already paused most of these trials as part of a strategic restructuring. Additionally, the FDA revoked the platform technology designation for Sarepta’s AAVrh74 platform. This follows a request from the FDA for Sarepta to halt shipments of its Elevidys gene therapy, which the company declined for ambulatory patients. Analysts have responded with caution, as Piper Sandler lowered its price target for Sarepta to $18.00, citing safety concerns with the Elevidys treatment. Cantor Fitzgerald maintained a Neutral rating with a $14.00 price target, while expressing concerns about Sarepta’s transparency. Despite these issues, Guggenheim reiterated a Buy rating with a $22.00 price target, although they noted the company’s credibility challenges.
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