Sarepta Therapeutics stock rating upgraded by JPMorgan on FDA decision

Investing.com - JPMorgan has upgraded Sarepta Therapeutics (NASDAQ:SRPT) from Underweight to Neutral and established a price target of $24.00, following the FDA’s recommendation to remove the voluntary pause on Elevidys shipments. The upgrade comes as the stock trades at $13.86, down significantly from its 52-week high of $150.48, with InvestingPro analysis indicating the stock is currently undervalued.

The FDA’s decision, which came just one week after Sarepta voluntarily paused shipments for ambulatory patients, represents a significant development for the company’s financial outlook, particularly regarding debt and partnership obligations with Arrowhead. Despite recent challenges, the company maintains strong liquidity with a current ratio of 4.02 and has demonstrated robust revenue growth of 59.15% over the last twelve months. (InvestingPro subscribers can access 12 additional key insights about Sarepta’s financial health and market position.)

Notably, the FDA concluded that a recently reported patient death in Brazil was not related to Elevidys, and the agency did not require additional clinical trial work as had been speculated in media reports last week.

Sarepta will resume shipping Elevidys immediately, though JPMorgan notes the company faces challenges in restoring confidence among patients, parents, physicians, and investors following this regulatory situation.

The investment bank maintains a cautious stance despite the upgrade, suggesting it could take several quarters to understand the Elevidys launch trajectory post-disruption, with ongoing concerns about potential headline risk.

In other recent news, Sarepta Therapeutics announced that the U.S. Food and Drug Administration has authorized the resumption of shipments for its Duchenne muscular dystrophy gene therapy, ELEVIDYS, for ambulatory patients. This follows a voluntary pause by the company to allow for a safety review, which the FDA has now completed. Despite this development, H.C. Wainwright reiterated its Sell rating on Sarepta stock, maintaining a $0 price target due to recent setbacks, including three patient deaths related to its gene therapy portfolio and a negative recommendation from the European Medicines Agency. Arrowhead Pharmaceuticals (NASDAQ:ARWR) has earned a $100 million milestone payment from Sarepta after reaching an enrollment target in a clinical study of ARO-DM1, a therapeutic for type 1 myotonic dystrophy. Meanwhile, Barclays (LON:BARC) downgraded Sarepta’s stock to Underweight, lowering the price target to $10 due to concerns over Elevidys. Similarly, JPMorgan downgraded the stock from Neutral to Underweight, citing negative headlines about Elevidys as a key factor. These developments reflect the complex landscape Sarepta is navigating in its therapeutic efforts and market positioning.

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