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Investing.com - BMO Capital has reiterated its Market Perform rating and $50.00 price target on Sarepta Therapeutics (NASDAQ:SRPT), currently trading at $14.08, following a buy-side survey that revealed significant investor concerns about the company’s future. According to InvestingPro data, the stock has fallen over 90% in the past year, though analysis suggests it may be undervalued at current levels.
The survey of 21 investors showed divided expectations regarding Elevidys in the ambulatory market, with approximately 50% believing the drug will remain available, while 90% expect the FDA to withdraw approval for non-ambulatory use.
Management credibility has taken a severe hit, with about 85% of investors rating it at 2 out of 10 or lower, following what BMO described as a "lack of LGMD death disclosure" during Sarepta’s July 16 conference call.
Financial stability concerns are mounting, as approximately 55% of survey respondents expect Sarepta will be unable to meet EBITDA requirements necessary to maintain access to its $600 million revolver and repay 2027 notes.
BMO Capital analyst Kostas Biliouris noted that about 75% of investors don’t expect upcoming DM1/FHSD readouts in the second half of the year to turn around Sarepta’s story, suggesting "a challenging road to recovery" with continued volatility expected in the near term. This aligns with broader analyst sentiment, as six analysts have recently revised their earnings estimates downward for the upcoming period.
In other recent news, Sarepta Therapeutics has faced a series of downgrades from multiple analysts due to safety concerns related to its gene therapy treatments. Mizuho (NYSE:MFG) downgraded Sarepta from Outperform to Neutral, citing concerns over the company’s AAVrh74 vector technology following a third patient death from acute liver failure. The FDA has requested Sarepta to voluntarily halt shipments of its Duchenne muscular dystrophy therapy, Elevidys, instead of adding a black box warning. Leerink Partners also downgraded the stock to Market Perform, expressing doubts about management’s credibility and the potential market removal of Elevidys. Deutsche Bank (ETR:DBKGn) further downgraded Sarepta to Sell, highlighting the negative impact of safety issues on patient trust and demand. Baird has similarly downgraded the stock to Neutral, pointing to existential uncertainties and transparency issues. Meanwhile, BMO Capital reduced its price target for Sarepta to $50, maintaining a Market Perform rating, while noting the negative impact on management credibility. These developments underscore significant challenges for Sarepta amid ongoing safety and regulatory concerns.
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