Morgan Stanley maintains Sarepta stock with $113 target

Tuesday, Sarepta Therapeutics shares received a sustained vote of confidence from Morgan Stanley, as the firm reiterated its Overweight rating and a $113.00 price target. The endorsement follows the recent approval of Sarepta's drug Elevidys in Japan, which is seen as a reinforcement of the drug's favorable benefit/risk profile. According to InvestingPro data, the stock currently trades at $36.71, significantly below its 52-week high of $173.25, suggesting potential upside based on Morgan Stanley's target.

Sarepta Therapeutics, which trades on (NASDAQ:SRPT), announced the Japanese approval of Elevidys via a press release. This development is a part of Sarepta's partnership with Roche, where Sarepta has outlicensed the exclusive commercial rights for Elevidys outside the United States. The financial terms of the deal with Roche include Sarepta being eligible for up to $1.7 billion in development, regulatory, and sales milestones, along with tiered royalties on net sales of Elevidys outside the U.S. This includes up to $103.5 million in near-term regulatory and commercial milestone payments. The company has demonstrated strong revenue growth, with InvestingPro showing a 59% year-over-year increase to $2.23 billion in the last twelve months.

The approval in Japan is particularly noteworthy given that Elevidys has faced challenges in Europe, where a partial clinical hold was placed following a potentially drug-related patient death in the United States. Despite these concerns, the Japanese approval signifies a positive step for Sarepta, aligning with the conclusions of an independent data monitoring committee which recently assessed the drug's safety.

Morgan Stanley's commentary suggests that while investors have been cautious about Elevidys following the safety update, the approval in Japan should provide a positive readthrough for the drug's prospects. The firm believes that this additional geographic approval may help alleviate investor concerns about the drug's safety and market potential.

The news of Elevidys' approval in Japan and Morgan Stanley's reaffirmed support could potentially influence Sarepta Therapeutics' stock performance in the near term as the market digests this development.

In other recent news, Sarepta Therapeutics announced that the Japanese Ministry of Health, Labour, and Welfare has approved ELEVIDYS for treating Duchenne muscular dystrophy (DMD) in children aged 3 to less than 8. This approval, a first for DMD therapy in patients younger than 4, is contingent upon demonstrating significant efficacy and safety in early clinical trials. Meanwhile, Evercore ISI downgraded Sarepta's stock from "Outperform" to "In Line," citing competitive pressures and regulatory uncertainties, while also reducing the price target to $50. BMO Capital Markets also adjusted its price target for Sarepta from $160 to $120, maintaining an Outperform rating, acknowledging recent challenges but expressing cautious optimism for potential positive developments by 2025.

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RBC Capital Markets reduced its price target for Sarepta to $58, maintaining a Sector Perform rating due to concerns over ELEVIDYS, including a patient death and production capacity challenges. These issues have led to a downward revision in Sarepta's revenue guidance. Cantor Fitzgerald also revised its price target for Sarepta to $81 from $163, maintaining an Overweight rating but expressing concerns about ELEVIDYS' safety and competitive threats. Despite these challenges, Sarepta's ELEVIDYS has been used to treat over 800 patients, with only one potentially drug-related death reported. Investors are keenly observing Sarepta's strategies to address these hurdles and their potential impact on the company's business operations.

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