A month has gone by since the last earnings report for Sarepta Therapeutics (SRPT). Shares have lost about 17.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Sarepta Therapeutics due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Sarepta Q4 Earnings Lag Estimates, Exondys 51 Sales Up
Sarepta incurred an adjusted loss of 85 cents per share in the fourth quarter of 2018, wider than the year-ago loss of 21 cents per share as well as the Zacks Consensus Estimate of a loss of 66 cents. The wider year-over-year loss can be primarily attributed to a significant rise in operating expenses.
Notably, the adjusted figure excluded one-time items, depreciation & amortization expenses, interest expenses, and income tax benefit. Including all these items, the company incurred a loss of $2.05 per share compared with a loss of 37 cents in the year-ago quarter.
Sarepta recorded total revenues of $84.4 million, up 7.5% sequentially, entirely from the sale of Exondys 51. The demand for the drug increased during the quarter. However, the top line marginally missed the Zacks Consensus Estimate of $84.91 million. In the prior-year quarter, Sarepta had earned revenues of $57.3 million.
Operating Expenses
Adjusted research and development (R&D) expenses totaled $77 million in the fourth quarter, up 87.8% year over year. The upside was driven by increased patient enrolment in late-stage golodirsen study and ramp-up of manufacturing activities for pipeline candidates, including gene therapies, and higher costs due to pipeline expansion. The metric was partially offset by lower cost related to clinical studies evaluating Exondus 52.
Selling, general & administrative (SG&A) expenses were $52.9 million, up 101.9% year over year. Higher costs related to the global commercial expansion of its products and increased personnel expenses led to the uptick.
Full-Year Results
Sarepta recorded 2018 sales of $301 million, up 94.7% year over year, solely from the sale of Exondys 51. The company incurred adjusted loss of $2.14 per share, wider than the year-ago loss of $1.34 per share. The year-over-year loss despite solid sales growth was due to rising costs to support global expansion for Exondys 51 and development of golodirsen, and gene therapies as well as higher royalty payments to BioMarin.
2019 Guidance
Sarepta expects Exondys 51 sales to be in the range of $365-$375 million in 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -149.74% due to these changes.
VGM Scores
At this time, Sarepta Therapeutics has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Sarepta Therapeutics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Sarepta Therapeutics, Inc. (SRPT): Free Stock Analysis Report
Original post
Zacks Investment Research