RBC: Sarepta's Setting The Bar Low, Buy On This Weakness

Shares of Sarepta Therapeutics Inc SRPT slid 15 percent after the company reported Q4 2016 results. The pressure on shares was mainly due to the disappointing guidance, which Sarepta should be able to meet or exceed, RBC Capital Markets’ Simos Simeonidis said in a report.

Simeonidis reiterated an Outperform on the company and recommended buying shares on weakness. The price target was reduced from $98 to $91.

Guidance Seems Conservative

Investors were clearly disappointed with Sarepta’s first sales guidance for EXONDYS 51, which came in at more than $80 million for FY2017, versus consensus expectations of $133.5 million. Simeonidis commented that management was “just being conservative and setting a low bar,” which the company should be able to beat.

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The analyst mentioned the following reasons for considering the guidance as conservative:

• Sales guidance for Q1 2017 came in at $13-$15 million, representing significant growth from the prior quarter’s $5.4 million.
• Management expressed confidence in the full-year sales guidance and said that they expected EXONDYS 51 to exceed $80 million in sales.
• “[M]anagement's discussion about acceleration of conversion rates of payors included a more confident tone than we've heard in the past,” Simeonidis wrote.