Wells Fargo (NYSE:WFC) initiated coverage on Sarepta Therapeutics (NASDAQ:SRPT), currently trading at $50.31, assigning an Overweight rating to the biopharmaceutical company with a price target set at $115. The firm's analyst, Yanan Zhu, expressed confidence in the company's Duchenne muscular dystrophy (DMD) treatments, including the gene therapy ELEVIDYS, despite a recent adverse event report. According to InvestingPro data, the stock is trading near its 52-week low of $48.01, with technical indicators suggesting oversold conditions.
Zhu highlighted that ELEVIDYS is still considered the best treatment option for most young DMD patients, and the commercial opportunity for Sarepta remains substantial. Wells Fargo does not anticipate significant alterations to the product's labeling and views the recent market downturn as a chance to invest in the company at a value. The company's strong financial position is evident in its current ratio of 4.2, indicating ample liquidity to fund its operations. InvestingPro subscribers can access 12 additional key financial metrics and expert insights about Sarepta's market position.
The price target of $115 is based on a discounted cash flow (DCF) analysis, with a large portion of the valuation driven by the commercial success of Sarepta's approved DMD products. These include the gene therapy ELEVIDYS and three exon-skipping products, with gene therapy being the primary value driver, contributing three times more than the exon-skippers to the company's worth. The company has demonstrated strong revenue growth of 53% over the last twelve months, supporting the bullish valuation thesis.
Wells Fargo's projection includes global sales for ELEVIDYS reaching $1.6 billion in 2025 and peak sales estimated at $3.5 billion by 2028. These figures take into account both ambulatory and non-ambulatory patient populations, suggesting a robust market demand for the therapy in the coming years.
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