Street Calls of the Week
On Friday, Scotiabank (TSX:BNS) initiated coverage on Sarepta Therapeutics (NASDAQ:SRPT) shares, assigning a Sector Perform rating with a one-year price target of $105. The decision was based on the performance of Sarepta’s gene therapy product Elevidys, which has seen a strong market launch. The company’s strong financial performance is evident in its 53% revenue growth over the last twelve months, reaching $1.9 billion. Despite the success, Scotiabank’s analysts, led by Louise Chen, expressed caution, citing that the positive market expectations might already be factored into the current stock price. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, with 13 exclusive ProTips available for deeper insight.
The analysts acknowledged Elevidys as one of the most successful gene therapy launches thus far. However, they also pointed out possible risks that could impact the stock negatively. One such risk is the potential failure of Elevidys to gain traction among nonambulatory patients. Additionally, advancements from competitors in their Duchenne muscular dystrophy (DMD) gene therapy programs could pose a threat to Sarepta’s market share. The company maintains a strong financial position with a current ratio of 4.2, indicating ample liquidity to navigate potential challenges.
Scotiabank’s coverage note also considered the long-term outlook for Sarepta Therapeutics. The analysts speculated that even if Elevidys reaches its sales peak around 2028, there is uncertainty whether Sarepta’s PMO business and early-stage assets, which include their limb girdle muscular dystrophy (LGMD) and siRNA pipeline, would be able to immediately compensate for any decline in sales.
The initiation of coverage by Scotiabank provides investors with a new perspective on Sarepta Therapeutics’ financial outlook. While recognizing the company’s current achievements, the analysts remain cautious about its future performance, particularly in light of potential market challenges and the need for a robust pipeline to sustain growth.
In other recent news, Sarepta Therapeutics has reported strong financial results for the fourth quarter of 2024, exceeding Wall Street expectations with an earnings per share (EPS) of $1.9, surpassing the forecast of $1.54. The company’s revenue for the quarter reached $658.4 million, significantly above the anticipated $589.45 million. Despite this robust performance, analysts from RBC Capital Markets have adjusted their price target for Sarepta, lowering it from $165.00 to $161.00, but maintained an Outperform rating, citing a conservative guidance from Sarepta that suggests potential to exceed sales forecasts for its product, Elevidys.
Cantor Fitzgerald has also maintained an Overweight rating on Sarepta with a price target of $163.00, reflecting confidence in the company’s financial outlook. Meanwhile, Mizuho (NYSE:MFG) Securities has reduced its price target from $195.00 to $190.00, while still retaining an Outperform rating, after reviewing the company’s fourth-quarter results and future sales projections. The firm noted that Sarepta’s product revenues of $638.2 million for the quarter surpassed their estimates and the consensus, indicating strong management execution.
Sarepta Therapeutics has reiterated its guidance for 2025, projecting net product revenue between $2.9 billion and $3.1 billion, which represents a 70% increase. Analysts from RBC Capital emphasized the underappreciation of Sarepta’s pipeline, highlighting expected positive data for Limb-girdle muscular dystrophy type 2E in 2025. Mizuho analysts also pointed out the growth potential for Sarepta’s Elevidys treatment for Duchenne muscular dystrophy, with less than 5% of eligible patients having received treatment so far. These recent developments suggest continued growth and market performance for Sarepta Therapeutics, as reflected in the analysts’ maintained ratings and adjusted price targets.
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