On Wednesday, Sarepta Therapeutics (NASDAQ:SRPT) shares were downgraded from Buy to Neutral by Citi, with a new price target set at $176, up from the previous $172. The adjustment follows a significant price surge of approximately 30% after the FDA approved and expanded the label for Elevidys, which was anticipated in Citi's base case scenario.
Citi's updated stance reflects the belief that Sarepta's current valuation is now fitting, given the recent developments. The firm has also made slight revisions to their Elevidys market model, which led to the increased target price. Despite some market participants suggesting a potential valuation of over $200 per share, Citi's analysis indicates a fair value closer to $180 under the current conditions.
The firm anticipates that Sarepta's stock might experience gradual growth based on incremental positive developments, such as approval in the European Union or advancements in neutralizing antibody (nAb) reduction strategies. However, Citi points out the absence of significant near-term catalysts until the Phase 3 ENVISION study results for non-ambulatory patients become available in 2026.
Citi also notes that while there is a possibility for upside from better-than-expected commercial performance of Elevidys in the non-ambulatory market or an acquisition by a larger pharmaceutical company, the current consensus estimates already reflect high expectations. Therefore, any volatility in the early stages of Elevidys' launch could potentially lead to a downside, given the optimistic projections already factored into the stock's valuation.
In other recent news, Sarepta Therapeutics has seen significant advancements with its drug Elevidys. The FDA granted an expanded approval for Elevidys to treat both ambulatory and non-ambulatory Duchenne muscular dystrophy patients aged four and older. This approval has led to several firms, including Mizuho Securities, BofA Securities, and Baird, revising their outlooks and raising their price targets for Sarepta.
Mizuho Securities increased its price target to $200, citing the potential for Elevidys sales to surpass long-term consensus estimates. BofA Securities raised its price target to $213, highlighting the drug's potential market reach. Baird also lifted its price target to $200, following the FDA's endorsement of the drug's safety and efficacy.
Goldman Sachs reiterated its Buy rating on Sarepta, projecting peak revenue for Elevidys to reach $2.6 billion by 2028. Citi maintained its Buy rating with a price target of $172, following the FDA's approval.
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