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TD Cowen downgraded Sarepta Therapeutics (NASDAQ:SRPT) from Buy to Hold on Wednesday, slashing its price target to $24.00 from $62.00 amid growing concerns about the company’s Duchenne muscular dystrophy treatment. The stock has already fallen 43% in the past week and 82% year-to-date, according to InvestingPro data.
The downgrade reflects "increased probability of withdrawal of Elevidys FDA approval" for both non-ambulatory and potentially ambulatory patients, according to TD Cowen’s analysis, particularly if Sarepta continues to lose support from the Duchenne muscular dystrophy community. InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 4.02, though it’s currently burning through cash reserves.
Safety concerns appear central to the downgrade, with TD Cowen noting that Elevidys shows a 30% liver function test elevation rate, suggesting the treatment’s safety profile "is being re-evaluated across all DMD pts."
The new $24 price target represents a significant reduction from the previous $62 target and is based on TD Cowen’s discounted cash flow valuation of Elevidys, adjusted for the probability of market withdrawal. While analyst targets range from $10 to $110, InvestingPro’s Fair Value analysis suggests the stock is currently undervalued despite recent challenges. Subscribers can access 12 additional ProTips and comprehensive analysis in the Pro Research Report.
Sarepta received FDA approval for Elevidys (delandistrogene moxeparvovec-rokl) in 2023 as the first gene therapy for Duchenne muscular dystrophy, a rare genetic disorder that causes progressive muscle degeneration and weakness. The company generated $2.2 billion in revenue over the last twelve months, though analysts expect profitability challenges ahead.
In other recent news, Sarepta Therapeutics has faced significant scrutiny following safety concerns related to its Elevidys treatment. The company reported a second patient death due to acute liver failure, leading to several analyst downgrades and price target reductions. Goldman Sachs downgraded Sarepta from Buy to Neutral, setting a price target of $29, while TD Cowen lowered its target from $137 to $62, maintaining a Buy rating. Morgan Stanley (NYSE:MS) also downgraded the stock from Overweight to Equalweight, reducing the price target to $40.
Sarepta has paused Elevidys shipments for non-ambulatory patients and is working on an enhanced immunosuppression regimen that includes sirolimus to address safety issues. Evercore ISI adjusted its projections, now estimating $250 million in quarterly Elevidys sales, while expressing concern over long-term cash generation. Wolfe Research initiated coverage with a peerperform rating, predicting revenue recovery by Q4 but noting ongoing safety risks. The company has withdrawn its fiscal year 2025 revenue guidance of $2.3-2.6 billion, reflecting the uncertainty surrounding its current challenges.
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