US stock futures flounder amid tech weakness, Fed caution
On Tuesday, JPMorgan reiterated its Overweight rating and $187.00 price target on Sarepta Therapeutics (NASDAQ:SRPT), following the company’s announcement regarding a patient death post-treatment with Elevidys. The stock, currently trading at $80.60 and near its 52-week low, has seen increased pressure with a year-to-date decline of 17%. While sentiment remains cautious after this update, the fundamental impact on Elevidys sales will likely remain unclear until upcoming quarterly reports.
Sarepta reported a patient death associated with acute liver failure after treatment with Elevidys, a potential side effect noted in the drug’s prescribing information. The patient also had a recent cytomegalovirus (CMV) infection, which may have contributed to the outcome. The event has been reported to regulatory authorities, and the company plans to update the prescribing information accordingly. Despite these challenges, InvestingPro data shows Sarepta maintains strong financial health with a current ratio of 4.2, indicating robust liquidity to manage operational challenges.
JPMorgan analysts suggest that physicians might now review patient histories more thoroughly for past CMV episodes before administering Elevidys. This scrutiny could influence near-term usage of the therapy as the medical community awaits further guidance. The exact changes to prescribing information have not been specified at this time.
Despite the recent incident and its potential implications, JPMorgan has decided to maintain its positive outlook on Sarepta Therapeutics. The firm’s stance is based on the long-term potential of Elevidys and Sarepta’s broader pipeline of treatments, supported by impressive revenue growth of 53% in the last twelve months. The market’s sentiment towards Sarepta’s shares may continue to be affected until there is clarity on label updates or usage guidelines from physicians. For deeper insights into Sarepta’s valuation and growth prospects, InvestingPro offers comprehensive analysis with 13 additional ProTips and a detailed research report available exclusively to subscribers.
In other recent news, Sarepta Therapeutics is navigating significant developments following the reported death of a patient treated with its gene therapy product, Elevidys. The incident, which involved acute liver failure, has prompted several analyst firms to weigh in on the situation. TD Cowen and BofA Securities have maintained their Buy ratings, with BofA setting a price target of $210.00, emphasizing the isolated nature of the incident given the over 800 patients treated without similar issues. Mizuho (NYSE:MFG) also reiterated its Outperform rating, suggesting the market’s reaction to the death may be excessive, while highlighting the drug’s positive benefit/risk profile.
Sarepta has communicated the incident to healthcare professionals through a "Dear Doctor" letter, detailing the possible contribution of a concurrent cytomegalovirus (CMV) infection to the patient’s liver failure. The company is considering updating Elevidys’s label to reflect the risk of death and plans to introduce CMV infection testing as a precautionary measure. Meanwhile, Scotiabank (TSX:BNS) initiated coverage with a Sector Perform rating and a $105 price target, noting Elevidys’s strong market launch but expressing caution about future market challenges and competition. These recent developments underscore the complexities Sarepta faces in balancing the safety of its therapies with market expectations.
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