UBS maintains Sarepta stock Buy rating, $188 target despite concerns

Wednesday saw Sarepta Therapeutics (NASDAQ:SRPT) stock encounter volatility following news of a patient death after treatment with the company’s drug Elevidys. Despite the unfortunate event, UBS analyst Eliana Merle reaffirmed a Buy rating on Sarepta Therapeutics with a steady price target of $188.00. According to InvestingPro data, the stock has fallen over 26% in the past week and is currently trading near its 52-week low of $73.06. Merle addressed the incident, acknowledging that while it introduced some uncertainty, the subsequent drop in share value—approximately 27% as of the close on Monday—was viewed as an excessive reaction.

Merle emphasized the continued high demand for Elevidys, considering it is the sole approved gene therapy for Duchenne muscular dystrophy (DMD), a fatal disease. The analyst suggested that the occurrence may be an isolated incident, potentially linked to the patient’s active CMV infection, rather than a systemic issue with the drug itself.

The UBS analyst also updated her financial model to reflect the recent closure of a deal with Arrowhead Pharmaceuticals (NASDAQ: NASDAQ:ARWR), noting that there were no alterations to the Elevidys revenue forecasts. This update was a result of conversations with management from both Sarepta and Regenxbio (NASDAQ: RGNX), the latter being a partner in the development of gene therapies. The company’s revenue growth remains robust at 53% over the last twelve months, with analysts expecting continued profitability this year.

In addition to management discussions, Merle included insights from consultations with medical professionals, which provided further context to the situation. However, specific details from these doctor checks were not disclosed in the report.

The analyst’s statement concluded with a focus on the valuation sensitivities for Sarepta Therapeutics and reiterated confidence in the company’s DMD revenue growth. Despite the current setback, UBS maintains a positive outlook on the stock’s potential.

In other recent news, Sarepta Therapeutics has been at the center of attention following a patient death associated with its Duchenne muscular dystrophy treatment, Elevidys. Despite this development, several firms have maintained their ratings on the company’s stock. H.C. Wainwright reiterated a Sell rating with a $75 price target, citing concerns about the drug’s adoption due to safety issues and questioning the company’s revenue guidance for Elevidys. On the other hand, Cantor Fitzgerald reaffirmed an Overweight rating with a $163 target, suggesting a cautious approach but not a significant shift in perspective.

Leerink Partners maintained an Outperform rating and a $200 target, highlighting the low incidence rate of severe side effects and projecting strong future sales for Elevidys. JPMorgan also held its Overweight rating with a $187 target, emphasizing the long-term potential of the treatment despite current uncertainties. TD Cowen kept a Buy rating with a $203 target, indicating continued confidence in Elevidys, especially for younger patients, despite the recent incident.

These recent developments indicate a mixed response from analysts, with some expressing caution while others maintain a positive outlook on Sarepta Therapeutics’ potential. The incident has led to discussions about the safety profile of Elevidys, particularly in specific patient subgroups. Investors continue to monitor the situation closely as they assess the implications of these updates on the company’s future performance.

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