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Baird maintains Outperform on Sarepta stock, lowers target as PPMO program is shelved

EditorAhmed Abdulazez Abdulkadir
Published 11/07/2024, 09:54 AM
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On Thursday, Baird adjusted its price target for Sarepta Therapeutics (NASDAQ:SRPT) shares, bringing it down to $193 from the previous target of $200. Despite the reduction, the firm maintains an Outperform rating on the biopharmaceutical company. The adjustment follows Sarepta's recent quarterly financial results, which featured strong sales growth for Elevidys, the company's leading product.

The quarterly report indicated that Elevidys sales exceeded expectations, with management providing positive commentary on the product's market introduction. Analysts believe that Elevidys has the potential to become a multi-billion-dollar product and expect it to be bolstered by several gene therapy launches planned for the next five years.

However, Baird expressed some disappointment due to Sarepta's decision to discontinue its PPMO (Peptide-conjugated Phosphorodiamidate Morpholino Oligomer) program. The termination of this program has prompted Baird to revise its target price, as the PPMO initiative was previously factored into the company's valuation model.

Despite the setback with the PPMO program, Baird's outlook for Sarepta remains positive. The firm anticipates that the stock will continue to perform well into the next year, supported by the company's robust product pipeline and the anticipated gene therapy launches. The lowered price target reflects a recalibration of expectations in light of the discontinued program but does not alter the firm's overall confidence in Sarepta's growth prospects.

In other recent news, Sarepta Therapeutics has seen several positive developments. Cantor Fitzgerald upgraded Sarepta's stock from Neutral to Overweight, citing strong capabilities in drug sales and potential for next-generation therapies. The firm also increased the price target to $167 from $152, reflecting confidence in the company's growth potential.

Sarepta's Elevidys business and Limb-Girdle muscular dystrophy portfolio were noted for their significant growth potential. The company reported a 51% year-over-year increase in net product revenue for Q2 2024, reaching about $361 million, primarily due to the broad approval of Elevidys. Sarepta also anticipates significant revenue growth in Q4 2024, projecting net product revenue to fall between $2.9 billion and $3.1 billion for 2025.

In addition to Cantor Fitzgerald, other firms including Jefferies, Barclays (LON:BARC), Raymond (NS:RYMD) James, Mizuho (NYSE:MFG) Securities, BMO Capital Markets, and TD Cowen have maintained positive ratings. Sarepta also announced the appointment of Deirdre P. Connelly, a pharmaceutical industry veteran, to its Board of Directors. The company is also advancing Phase 3 trials for its treatment for limb-girdle muscular dystrophy.

InvestingPro Insights

Sarepta Therapeutics' recent financial performance and market position are reflected in several key metrics from InvestingPro. The company's revenue growth is particularly noteworthy, with a 48.45% increase over the last twelve months as of Q3 2024, aligning with the strong sales growth for Elevidys mentioned in the article. This robust growth is further emphasized by the quarterly revenue growth of 40.79% in Q3 2024.

InvestingPro Tips highlight that Sarepta is expected to be profitable this year, which supports Baird's optimistic outlook. The company's high return over the last year, with a 54.31% price total return, reflects investor confidence in Sarepta's performance and potential.

However, it's important to note that Sarepta is trading at high valuation multiples, including a P/E ratio of 257.08 and a Price / Book ratio of 9.99. These metrics suggest that investors are pricing in significant future growth, likely based on the potential of Elevidys and the anticipated gene therapy launches mentioned in the article.

For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Sarepta Therapeutics, providing deeper insights into the company's financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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