Goldman Sachs maintains Sarepta stock Buy rating, $100 target

On Wednesday, Goldman Sachs reaffirmed its Buy rating and $100.00 price target for Sarepta Therapeutics (NASDAQ:SRPT), following a meeting with Dr. Vinay Prasad, the newly-appointed FDA CBER Director. The stock, currently trading near $38, has experienced significant pressure, falling over 72% in the past six months. According to InvestingPro analysis, the company appears undervalued at current levels, with analyst targets ranging from $40 to $137. The analyst at Goldman Sachs interpreted Dr. Prasad’s remarks as indicative of a regulatory approach that values flexibility while maintaining clinical integrity and respecting decisions of the previous CBER leadership, with the exception of those related to COVID-19.

The discussion with Dr. Prasad was particularly relevant to Sarepta’s drug Elevidys, which treats Duchenne muscular dystrophy and has full approval for use in ambulatory patients. Despite a recent patient death, the analyst noted that dosing in the United States and for the Phase 3 study in the United Kingdom (TADAWUL:4280) is ongoing. The analyst acknowledged, however, potential risks to Elevidys’ accelerated approval for non-ambulatory patients, which represents approximately half of the market. This is particularly crucial given Sarepta’s strong revenue growth of 59% over the last twelve months, though InvestingPro data shows the company is currently burning through cash rapidly. This concern stems from Dr. Prasad’s previous criticism of the former Director’s decision to overrule FDA staff recommendations regarding label expansion.

Goldman Sachs highlighted the importance of Sarepta’s commercial execution in the second half of the year, especially after the company’s first-quarter earnings report. The firm’s model suggests that if Elevidys revenue were to be reduced by half after 2027 due to unfavorable confirmatory data, the discounted cash flow (DCF) value could drop to $45 per share, assuming no contributions from the company’s pipeline.

However, Sarepta has projected $13 billion in free cash flow by the end of 2030 and is actively working to diversify its pipeline. This includes anticipated Phase 1 data from ARWR programs in the second half of the year, which could potentially contribute to the company’s growth and valuation. While the company maintains a healthy current ratio of 4.02, indicating strong short-term liquidity, analysts have recently revised earnings estimates downward. Discover more detailed insights and 8 additional key ProTips about Sarepta’s financial health in the comprehensive Pro Research Report, available exclusively on InvestingPro.

In other recent news, Sarepta Therapeutics has reported encouraging data from its ENDEAVOR study for the Duchenne muscular dystrophy treatment, ELEVIDYS. The study showed a mean protein expression of 93.87% of normal in a cohort of young participants, with safety results aligning with previous findings. Additionally, Sarepta announced that ELEVIDYS has been approved by Japan’s Ministry of Health, Labour, and Welfare for children ages 3 to less than 8, marking a significant milestone as the first global approval for patients under 4 years old.

Morgan Stanley (NYSE:MS) has maintained its Overweight rating on Sarepta with a $113 price target, following the Japanese approval, which is seen as a positive step for the drug’s market potential. However, Evercore ISI downgraded Sarepta’s stock from "Outperform" to "In Line," citing competitive pressures and regulatory uncertainties, and reduced the price target to $50. BMO Capital Markets also adjusted its price target from $160 to $120, while maintaining an Outperform rating, highlighting challenges such as a first-quarter earnings miss and revised 2025 financial guidance.

Sarepta’s collaboration with Roche for ELEVIDYS includes up to $1.7 billion in potential milestone payments, with the Japanese approval being a crucial part of their global strategy. These developments underscore the mixed investor sentiment surrounding Sarepta as it navigates regulatory landscapes and competitive markets.

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