Sarepta Therapeutics (SRPT) Down 8% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Sarepta Therapeutics (SRPT). Shares have lost about 8% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.

Sarepta Q4 Loss Widens Y/Y, Revenues Beat Estimates

Sarepta incurred an adjusted loss of $1.57 per share in the fourth quarter of 2019, wider than the year-ago adjusted loss of 85 cents per share. The wider year-over-year loss can be primarily attributed to a significant rise in operating expenses.

Notably, the adjusted figure excludes one-time items, depreciation & amortization expenses, interest expenses, income tax benefit, stock-based compensation expense and other items. Including all these items, the company incurred a loss of $3.16 per share compared with a loss of $2.05 in the year-ago quarter. The Zacks Consensus Estimate was pegged at a loss of $1.91.

Meanwhile, Exondys 51 continued with its strong performance. The company derived revenues solely from the sale of Exondys 51. Sarepta recorded total revenues of $100.1 million, up 18.6% year over year. However, revenues missed the Zacks Consensus Estimate of $100.25 million.

Operating Expenses

Adjusted research and development (R&D) expenses totaled $135.4 million in the fourth quarter, up 75.8% year over year. The increase was primarily due to increased clinical activities and initiation of certain post-market studies for Exondys 51.

Adjusted selling, general & administrative (SG&A) expenses were $65.8 million, up 24.4% year over year. Higher costs related to the global commercial expansion of its products and increased personnel expenses increased SG&A expenses.

Full Year Results

Sarepta reported full-year revenues of $380.8 million, up 26.5% from the year-ago period. Adjusted loss in the period was $4.30 per share compared with $2.14 per share in the year-ago period. The significant increase in loss was mainly due to higher operating expenses.

2020 Outlook

Sarepta provided sales guidance for Exondys 51for 2020. It expects the drug to generate $420 million to $430 million in sales. The launch of Vyondys 53 is in initial stage and hence the company plans to provide guidance on its sales later this year.

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 -46% due to these changes.

VGM Scores

Currently, Sarepta Therapeutics has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% 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.