Sarepta stock holds $200 target despite patient death

Tuesday, shares of Sarepta Therapeutics (NASDAQ:SRPT) faced downward pressure before market opening due to a reported patient death following treatment with Elevidys, the company’s therapy for Duchenne muscular dystrophy (DMD). Despite this tragic incident, Leerink Partners maintained their Outperform rating and $200.00 price target on the stock. According to InvestingPro data, the stock is currently trading near its 52-week low of $97.06, with analysts setting targets ranging from $75 to $215 per share. The company maintains strong fundamentals with a healthy current ratio of 4.2, indicating robust liquidity.

The patient who passed away had suffered acute liver failure, a known side effect of Elevidys and similar adeno-associated virus-mediated gene therapies, according to the FDA label. The treating physician also identified a recent cytomegalovirus infection as a potential contributing factor to the patient’s condition. Sarepta Therapeutics has dosed over 800 patients with Elevidys in clinical trials or as prescribed therapy and believes this case to be very unique, with an estimated incidence rate of less than 0.125%. The company’s financial health remains strong, with InvestingPro analysis showing impressive revenue growth of 53% over the last twelve months and liquid assets exceeding short-term obligations. For deeper insights into SRPT’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Leerink Partners highlighted that while the severe side effect is concerning, the overall low incidence rate is encouraging. Furthermore, they noted that the stock’s pre-market indication, suggesting a drop of more than 25%, was an overreaction. The firm pointed out that the stock had already been under significant pressure year-to-date, with a 17% decline compared to a 2% decrease for the XBI biotech index.

The analyst from Leerink Partners emphasized the potential for a buying opportunity in light of the anticipated strong launch of Elevidys. They projected sales of approximately $2.1 billion for 2025, aligning with consensus and management’s guidance of net product revenue between $2.9 and $3.1 billion, which includes contributions from the PMO franchise.

The firm’s outlook remains positive based on the treatment’s sales trajectory since the expanded label and the conservative nature of the company’s full-year guidance. They reiterated confidence in the stock’s performance, suggesting that the current market reaction might not reflect the company’s potential and the therapy’s benefits. InvestingPro data reveals a strong analyst consensus recommendation of 1.65 (where 1 is Strong Buy), with projected earnings growth and a PEG ratio of 0.3, suggesting potential undervaluation relative to growth prospects.

In other recent news, Sarepta Therapeutics has been at the center of attention following the report of a patient death linked to its gene therapy product, Elevidys. The patient, who was undergoing treatment for Duchenne muscular dystrophy, experienced acute liver failure, a known risk associated with the therapy. This incident, involving a patient who also had a recent cytomegalovirus (CMV) infection, has prompted Sarepta to consider updating the prescribing information for Elevidys. Despite the gravity of the situation, several analyst firms, including JPMorgan, TD Cowen, Mizuho (NYSE:MFG), and BofA Securities, have maintained their positive ratings on Sarepta’s stock. JPMorgan reiterated its Overweight rating with a $187 target, while TD Cowen and BofA Securities kept their Buy ratings with targets of $203 and $210, respectively. Mizuho also upheld an Outperform rating, emphasizing the drug’s positive benefit/risk profile. Analysts suggest that the incident may be an isolated case, given the large number of patients treated without prior reports of such severe outcomes. Sarepta’s ongoing communication with healthcare professionals and regulatory authorities underscores its commitment to patient safety as it navigates these developments.

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