Sarepta Therapeutics will likely miss Wall Street's first-quarter expectations, an analyst said Monday, noting Sarepta stock took a beating after its last report.
In February, Sarepta guided to flat sales of its new gene therapy, Elevidys, in the first half of the year. That puts sales at about $131 million in the first quarter. But the Street still expects the Duchenne muscular dystrophy treatment to bring in $138 million in that period, says Mizuho Securities analyst Uy Ear.
"We'd like to call out that Sarepta was already punished following the fourth-quarter call for lower-than-expected first-half Elevidys sales guidance, and Sarepta has not rebounded since," he said in a report to clients.
Since the fourth-quarter report, Sarepta stock has fallen almost 11% as of Monday's close. Still, that's better than the 12% drop for the SPDR S&P Biotech exchange traded fund. Sarepta shares mostly traded sideways on today's stock market, ending the regular session up a fraction.
Sarepta Stock: A Buy Opportunity?
It's important to note that Sarepta's Roche-partnered Elevidys treats Duchenne muscular dystrophy in patients age 4 to 5. So far, the launch has been strong.
But "after two quarters, it appears that Sarepta has largely treated the available pool of DMD patients with its gene therapy," Mizuho's Ear said.
The trouble is patients are often diagnosed with the muscle-wasting disease around age 4 to 5. Since the gene therapy is only currently approved for patients in that age range, that gives parents little time to become aware of the therapeutic options and gain access to Elevidys, he said.
"Patients may age out of treatment eligibility, making it difficult to accelerate Elevidys adoption beyond the fourth-quarter of 2023 level," he said.
But Ear kept his buy rating on Sarepta stock. The company has already asked the Food and Drug Administration to approve Elevidys for all patients with the mutated gene tied to Duchenne muscular dystrophy. The FDA expects to make its decision by June 21.
Overall, Ear calls for Sarepta to generate $357 million in first-quarter sales. This includes Elevidys, Sarepta's other non-gene therapy Duchenne muscular dystrophy drugs and collaboration revenue. Analysts broadly expect $383 million.
"We model lower first-quarter revenues of $357 million (incorporating guidance) and would buy on weakness should Sarepta depreciate due to an inappropriately high consensus forecast," he said. He says Elevidys "has a high likelihood for a broad label expansion and strong adoption."
Ratings Are Under Pressure
Sarepta stock has a promising Composite Rating of 91, according to IBD Digital. This means shares rank in the top 9% of all stocks in terms of fundamental and technical measures.
But the Relative Strength Rating has deteriorated, falling to 68 from 74 just a week ago. The RS Rating is a 1-99 measure of a stock's 12-month performance.
Sarepta stock is consolidating with a buy point at 143, MarketSurge.com shows.
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