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On Friday, Scotiabank (TSX:BNS) analysts upgraded Sarepta Therapeutics (NASDAQ: NASDAQ:SRPT) stock from Sector Perform to Sector Outperform. The analysts maintained a price target of $80, highlighting a favorable risk-reward scenario for the company. According to InvestingPro data, the stock appears undervalued despite falling nearly 70% over the past six months, with analyst targets ranging from $40 to $137.
The decision to upgrade the stock rating comes after recent negative news, including a patient death related to Elevidys and a downward revision of 2025 sales guidance, was deemed to be already factored into the company’s share price. The analysts see several upcoming catalysts that could potentially drive the stock higher. The company maintains strong liquidity with a current ratio of 4.02, and revenue grew 59% in the last twelve months. Get deeper insights with InvestingPro, which offers 10 additional key tips about SRPT’s performance.
Among the factors cited by Scotiabank are the increasingly positive stance of Vinay Prasad, Director of the Center for Biologics Evaluation and Research (CBER), on rare disease drugs. Additionally, a pickup in Elevidys sales is expected in the second half of 2025, with modest expectations from the market.
The analysts also pointed to potentially positive readouts for Duchenne Muscular Dystrophy Type 1 (DM1), Facioscapulohumeral Muscular Dystrophy (FSHD), and Limb-Girdle Muscular Dystrophy (LGMD) this year, along with an upcoming Research and Development day later in 2025, as potential drivers for the stock.
In other recent news, Sarepta Therapeutics announced that its rAAVrh74 viral vector, utilized in the investigational gene therapy SRP-9003 for limb-girdle muscular dystrophy, received platform technology designation from the FDA. This designation is intended to expedite the development and review processes by utilizing prior data to support new drug applications. Additionally, Sarepta released promising data from its ENDEAVOR study for its Duchenne muscular dystrophy treatment, ELEVIDYS, showing high levels of protein expression and a consistent safety profile. The study’s results have prompted Sarepta to engage in discussions with the FDA regarding potential label expansion to include younger patients.
In another development, ELEVIDYS received approval from the Japanese Ministry of Health, Labour, and Welfare for use in children aged 3 to less than 8, marking the first global approval for this age group. This approval, part of a collaboration with Roche, is contingent on continued efficacy and safety results. Furthermore, Morgan Stanley (NYSE:MS) reiterated its Overweight rating with a $113 target for Sarepta, following the Japanese approval of ELEVIDYS. Goldman Sachs also maintained its Buy rating with a $100 target, highlighting the importance of Sarepta’s commercial execution and ongoing trials.
These analyst ratings reflect confidence in Sarepta’s strategic direction and product potential, despite some regulatory challenges in other regions. Sarepta continues to focus on advancing its portfolio across various therapeutic areas, including muscle, central nervous system, and cardiac diseases.
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