JPMorgan sees 2017 as 'tale of two halves' for Sarepta
Looking to 2017, JPMorgan analyst Anupam Rama believes Sarepta Therapeutics' (SRPT) shares could be range-bound in the first half of the year as Wall Street re-calibrates to a more appropriate Exondys 51 launch trajectory. However, the analyst says Sarepta could be poised for a rebound in the second half of 2017 as it works with payers and provides greater clarity. POISED FOR A REBOUND: In a research note this morning, JPMorgan's Rama initiated coverage of Sarepta with an Overweight rating and $40 price target. The analyst noted that the stock is down over 50% since the September approval of the company's Exondys 51 for the treatment of Exon 51 Duchenne muscular dystrophy. The analyst also sees overall negative sentiment in the market related to the company's commercial launch dynamics. Although physicians showed a "strong desire" to transition patients to therapy, some payer discussions called into question the clinical benefit of Exondys 51 overall, with others noting it would be difficult to limit reimbursement given unmet need in Duchenne muscular dystrophy, he pointed out. While Rama believes it could take two quarters for Wall Street to re-calibrate to a more appropriate launch trajectory, keeping Sarepta's shares range-bound/volatile in the first half of 2017, he told investors that the stock could be poised for a rebound given greater clarity on market dynamics, time to work with payers and pipeline data on the horizon. "Patience will be required" for Sarepta investors, the analyst contended. WHAT'S NOTABLE: Yesterday, Leerink analyst Joseph Schwartz lowered his price target for Sarepta to $33 from $55 as he continues to see a "significant likelihood" that the launch metrics that the company will announce in early January may disappoint Wall Street, where revenue estimates are still aggressive relative to the number of patients that he believes are receiving reimbursement for Exondys 51. The analyst reiterated a Market Perform rating on the shares. PRICE ACTION: In morning trading, shares of Sarepta have gained about 1.5% to $29.91.