For the last few months, shares of Sarepta Therapeutics (NASDAQ: SRPT) trended in the $33 - $35 range. That ended on July 20 when the company reported strong slaes of EXONDYS 51, a drug that treats patients with Duchenne muscular dystrophy (“DMD”).
Sarepta reported sales of $35 million for Exondys 51. It provided investors a second-quarter guidance of $130 million (maximum). This is around five-fold above the $22 million consensus estimate. As usual, analysts are behind the curve following the announcement. RBC, SunTrust, and Needham all raised their price target for the stock.
Short-covering may explain SRPT’s jump from $35 to over $42. The short float is 23.8%. The stock may attract momentum traders at this point in time but the longer-term prospects are strong. Chances are good Sarepta will beat its own forecasts. Strong operational execution in launching Exondys will lead to higher prescriptions.
A buyout in SRPT stock is not impossible. Larger pharmas with plenty of cash flow but slow growth are looking for the next blockbuster drug company. In the past quarter, management impressed the market by spending effectively in R&D (up from $44.3m to $58.9m) and reporting $35m in revenue.
