Oppenheimer Stays Bullish On Sarepta As Concerns Continue To Swirl

Shares of Sarepta Therapeutics Inc SRPT have declined sharply, with continued concerns around reimbursement and competition. The shares could appreciate going ahead, driven by “the ongoing eteplirsen EU application review process and increasing visibility on a successful US launch,” Oppenheimer’s Hartaj Singh said in a report.

Singh maintains an Outperform rating on the company, with a price target of $76.

Exondys Underestimated

Sarepta’s current market cap of $1.5 billion suggests that the Street values peak Exondys 51 sales in the US at $300-$500 million, which is “at the low end of biotech growth story multiples,” Singh noted. Improved visibility into the continuing successful US launch could result in “a multiple expansion up to twice that is currently ascribed.”

There are less than 50 public and fewer than 200 private reimbursement plans and merely 1,000-1,500 patients in the US. The small number of payers being surveyed is “leading to erroneous conclusions,” the analyst commented.

Related Link: Sarepta Under Pressure Amid Concerning Exondys 51 Survey Results

Sarepta’s Q4 2016 earnings call is scheduled on February 28, and there may not be any significant change from the update provided in mid-January.

Recommending investors to add to positions, Singh said that given positive sentiment around the US launch and with the EU application approval expected at yearend 2017 or in early 2018, “we believe the current valuation of the name is irrational.”