DJ Sarepta Therapeutics Stock Drops on Earnings. Why Analysts Remain Hopeful. -- Barrons.com
By Josh Nathan-Kazis
Shares of the biotech Sarepta Therapeutics dropped 2.7% in premarket trading on Tuesday after the company's quarterly earnings report, issued Monday night, missed Wall Street expectations.
Sarepta reported losses of $1.84 per share for the fourth quarter of its 2020 fiscal year, worse than the S&P Capital IQ Consensus estimate of $1.46 per share. The company reported revenue of $145.1 million, below the FactSet consensus estimate of $150.4 million.
Sarepta (ticker: SRPT) shares closed at $87.03 on Monday, and were trading at $85.30 Tuesday morning. The stock is down 49% so far this year, after a trial of its gene therapy intended to cure Duchenne muscular dystrophy returned disappointing results in early January.
Yet despite the pullback on Tuesday morning, analysts said in notes late Monday and early Tuesday that the setup for the stock remains positive.
"Though less robust commercial performance sets a lower floor, we continue to believe valuation underappreciates the potential for success of its muscular dystrophy gene therapies based on the data to date," wrote RBC Capital Markets analyst Brian Abrahams, who rates the stock Outperform.
In a separate note, Mizuho analyst Difei Yang wrote that the "most important value driver" for the stock remains the Duchenne muscular dystrophy gene therapy. "We continue to ...maintain our 70% [probability of success] for this program," she wrote. "In contrast, we believe the current market price implies 0% [probability of success]."
The earnings report came days after the U.S. Food and Drug Administration approved a Duchenne muscular dystrophy treatment from Sarepta known as Amondys 45, Sarepta's third so-called RNA exon-skipping treatment for the disorder.
"In the midst of a challenging pandemic, in 2020 the Sarepta team executed and stayed focused on the patients we serve," the company's CEO, Doug Ingram, said in a statement. "We advanced our multiplatform portfolio and achieved a number of important milestones, both in our gene therapy and in our RNA platform, including the submission of our FDA application for the approval of AMONDYS 45 ...which resulted in the approval we reported last week."
On a conference call for investors on Monday evening, Ingram discussed company plans for its next trial of the Duchenne muscular dystrophy gene therapy that returned disappointing results in January.
"We are convinced not only that there's a lot of insight here, but that we can greatly increase the probability of success in the next trial in a very nuanced way," Ingram said of the gene therapy, in response to a question from analysts. "We have already out of Study 102 significantly more insight and data than anyone else would have regarding a construct for micro-dystrophin for the use of Duchenne muscular dystrophy. That will help us design our next study. We candidly call that Study 301."
Of the 23 analysts tracked by FactSet who cover Sarepta, 14 rate it Overweight or Buy, eight rate it Hold, and one rates it Sell.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com
(END) Dow Jones Newswires
March 02, 2021 08:57 ET (13:57 GMT)
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