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UBS upgraded Alkermes (NASDAQ:ALKS) from Neutral to Buy on Tuesday, raising its price target to $42.00 from $33.00. The upgrade reflects UBS’s growing confidence in the company’s orexin receptor drug candidate ALKS-2680 for narcolepsy and idiopathic hypersomnia treatment. According to InvestingPro data, Alkermes maintains excellent financial health with a "GREAT" overall score, supported by strong fundamentals including an impressive 84.42% gross profit margin.
UBS analyst commentary indicates that a recent physician survey strengthened the firm’s outlook on ALKS-2680’s market positioning. The drug candidate appears well-positioned to potentially establish itself as an attractive treatment option in sleep disorders, according to the research note.
The current stock valuation prices in approximately $1.2 billion in 2030 estimated sales, compared to UBS’s base case projection of $1.8 billion. This base case includes $350 million specifically for ALKS-2680, with the remainder attributed to Alkermes’ existing business portfolio. With a market capitalization of $4.85 billion and a P/E ratio of 15.08, InvestingPro analysis indicates the stock is currently trading near its Fair Value.
UBS notes that three key mid/late-stage orexin clinical trial results are expected in the second half of the year from Alkermes, Takeda, and Centessa Pharmaceuticals. These upcoming data readouts could generate broader market excitement for the entire orexin drug class.
The price target increase represents a 27% upside from the previous $33.00 target, signaling UBS’s more bullish stance on Alkermes’ growth prospects in the sleep disorder treatment market. Analyst targets range from $30 to $52, with broader consensus supporting potential upside. For deeper insights into Alkermes’ valuation and growth prospects, including exclusive ProTips and comprehensive financial analysis, explore the detailed Pro Research Report available on InvestingPro.
In other recent news, Alkermes has reported its first-quarter earnings for 2025, surpassing expectations in both revenue and earnings per share while reaffirming its full-year guidance. Analysts from Stifel maintained their Buy rating with a $42 price target, citing the company’s solid financial performance and the potential of its orexin receptor agonist, ALKS 2680, which is anticipated to have significant readouts from two phase 2 studies later in the year. Cantor Fitzgerald also reaffirmed an Overweight rating with a $43 price target, emphasizing the importance of upcoming Phase 2 trial results for ALKS 2680 in treating narcolepsy types 1 and 2, as well as idiopathic hypersomnia.
Additionally, RBC Capital reiterated a Sector Perform rating with a $40 price target, expressing caution regarding the safety profile of orexin receptor 2 agonists. Meanwhile, TD Cowen maintained a Buy rating and a $27 price target, highlighting the potential growth in the narcolepsy and idiopathic hypersomnia markets, which could expand significantly with new treatment approvals. Stifel analysts expressed optimism about ALKS 2680’s prospects, especially if positive results are achieved in both studies, which could enhance the commercial opportunity for the drug.
The company’s CEO, Richard Pops, discussed strategic moves during Stifel’s Boston Biotech Bus Tour, reinforcing confidence in Alkermes’ pipeline developments. Analysts are closely monitoring the upcoming trial results, as these could validate the therapeutic benefits of ALKS 2680 and strengthen Alkermes’ position in the sleep disorder market. The company’s management has also provided insights into the evolution of Most Favored Nation drug pricing, indicating a favorable position amid complexities.
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