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On Tuesday, RBC Capital analysts reiterated a Sector Perform rating for Alkermes stock (NASDAQ:ALKS), maintaining a $40.00 price target, which sits between the current analyst range of $30-$52. Trading at $31.39, InvestingPro analysis suggests the stock is fairly valued. The analysts expressed caution regarding the safety profile of orexin receptor 2 (OX2R) agonists, which are expected to have significant wake-promoting effects.
The analysts identified five key areas of concern that could impact Alkermes’ upcoming readouts. Despite these concerns, the company maintains strong financial health with a current ratio of 3.33 and more cash than debt on its balance sheet. They highlighted the potential for stimulant-like effects from OX2R agonism, which could pose regulatory challenges if there are any associated risks leading to scheduling.
Additionally, the analysts pointed out the possibility of urinary urgency and frequency as observed in a phase II trial by another company, which could affect Alkermes’ drug profile. They also noted potential cardiac dysfunction risks linked to OX2R expression in cardiac cells, referencing a long-QT safety signal observed in another company’s trial. For deeper insights into Alkermes’ financial health and comprehensive analysis, check out the detailed Pro Research Report available on InvestingPro.
Visual disturbances, although mild and transient in Alkermes’ trials, were also mentioned as a concern due to OX2R signaling in vision-related cells. Lastly, the analysts warned about the complexity of downstream orexin signaling, which could introduce additional safety signals despite the potential for developing new indications. The company maintains strong profitability with an 84% gross margin and positive earnings yield of 7%, according to InvestingPro, which offers 8 additional key insights about ALKS.
In other recent news, Alkermes has reported robust financial performance for the first quarter of 2025, surpassing expectations on both revenue and earnings per share. The company has also reaffirmed its full-year guidance, maintaining a solid foundation for its valuation. Stifel analysts have reiterated a Buy rating with a $42.00 price target, expressing optimism about the potential of Alkermes’ orexin receptor agonist, ALKS 2680, with significant data expected from two phase 2 studies later in the year. Similarly, Cantor Fitzgerald has maintained an Overweight rating and a $43.00 price target, highlighting the upcoming Phase 2 trial results for ALKS 2680 as critical for validating the drug’s potential in treating sleep disorders.
TD Cowen has also kept a Buy rating for Alkermes with a $27.00 price target, focusing on the growth potential of the narcolepsy and idiopathic hypersomnia markets. The analyst emphasized the promise of the orexin 2 receptor agonist class and the potential market expansion with new treatments. In a somber development, Alkermes announced the passing of its Chief Financial Officer, Iain M. Brown, who had a significant impact during his 22-year tenure. Interim financial officers Blair C. Jackson and Samuel J. Parisi will continue in their roles as the company searches for a new CFO. These updates reflect the ongoing developments and strategic moves within Alkermes as it navigates its financial and operational landscape.
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