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On Thursday, Guggenheim Securities adjusted its outlook for Sarepta Therapeutics (NASDAQ:SRPT), reducing the price target on the company's stock to $112 from the previous $150 while sustaining a Buy rating. The adjustment comes amid concerns about the market uptake of Sarepta's drug Elevidys, particularly within the non-ambulant patient population, which is estimated to represent at least 40% of the market. The stock, currently trading at $55.65, has declined over 54% in the past six months, though InvestingPro analysis suggests the stock is currently undervalued. Key opinion leader (KOL) checks have shown a trend of Elevidys being preferred for use in younger, ambulant patients. This preference has been further entrenched following the recent death of a 16-year-old boy due to complications after receiving an Elevidys infusion.
In addition to the uptake concerns, Guggenheim cited regulatory uncertainties regarding the future of the Elevidys label, which currently includes non-ambulant boys under accelerated approval. The firm also pointed to increasing competition expected from exon skipping and gene therapy treatments that are anticipated to become commercially available starting in 2026.
Despite these challenges, Guggenheim's revenue estimate for the first quarter of 2025 stands at $690 million, aligning with the consensus. For the full year 2025, the firm is modeling revenues of $2.954 billion, with Elevidys sales projected at $1.739 billion, both figures being on the lower end of the management's guidance of $2.9 billion to $3.1 billion. The company has demonstrated strong growth potential, with revenue increasing 53% in the last twelve months to $1.9 billion. InvestingPro data reveals 12 additional key insights about Sarepta's financial health and growth prospects, available to subscribers.
Guggenheim has not altered its below-consensus revenue forecasts for the years 2025 to 2030 but has increased its weighted average cost of capital (WACC) assumption to 10.1% from the previous 7.3%. The increase in WACC is intended to reflect the heightened risks associated with the stock. The firm also raised questions about Sarepta's management strategies in light of the current economic climate, including the potential use of the company's balance sheet for aggressive stock buybacks or the timing of cash outlays for acquisitions, such as the one for Arrowhead Pharmaceuticals (NASDAQ:ARWR), which may now limit Sarepta's financial flexibility. Despite these concerns, the company maintains a healthy current ratio of 4.2 and operates with a moderate debt-to-equity ratio of 0.88, indicating solid financial positioning.
In other recent news, Sarepta Therapeutics announced the resumption of clinical trials for its gene therapy, ELEVIDYS, following a favorable safety review by an independent committee. The trials had been temporarily halted due to concerns over acute liver failure in patients. Despite this pause, Sarepta does not anticipate a significant impact on the study timelines. Meanwhile, Oppenheimer has adjusted its price target for Sarepta to $184, maintaining an Outperform rating, following discussions with a neurologist about the drug's risk profile. H.C. Wainwright, on the other hand, has maintained a Neutral rating with a $75 target, citing concerns over the European Medicines Agency's temporary clinical hold on ELEVIDYS trials. Barclays (LON:BARC) continues to rate the stock as Overweight with a $209 target, expecting the suspension to be lifted soon. Needham has revised its price target to $183, maintaining a Buy rating, but has lowered its sales forecast for 2025 due to regulatory challenges. The developments underscore ongoing scrutiny and analysis of ELEVIDYS as Sarepta navigates the regulatory landscape.
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