UPDATE: Bank of America Downgrades Alkermes plc to Underperform, Raises PT on ALKS-5461 Market Opportunity

In a report published Friday, Bank of America analyst Steve Byrne downgraded the rating on Alkermes plc ALKS from Neutral to Underperform, but raised the price target from $24.00 to $29.00. In the report, Byrne noted, “While we are increasing our PO for ALKS shares to $29 (from $24), we are lowering our rating to Underperform as we view the recent $1bn increase in EV for ALKS shares to be unwarranted. A key driver of our valuation change is ALKS-5461 for major depressive disorder (MDD), following recent positive top line phase 2 data. We appreciate the significant market opportunity for this drug, as we estimate 12mn scripts written per month in the US for treating MDD, with roughly one third of patients inadequately treated by current standard of care therapies (e.g. SSRIs). However, we believe we have incorporated more conservative risk adjustments for ‘5461 than in market expectations, owing to significant challenges in our view that could lie ahead for this product. We value ‘5461 at $2.50/sh.” Alkermes plc closed on Thursday at $31.92.