In a research report published Tuesday afternoon, J.P. Morgan analyst Cory Kasimov downgraded shares of Alkermes Plc (NASDAQ:ALKS) from an Overweight to a Neutral rating, while slashing the price target to $51 (from $77), after the company announced that ALKS 5461 missed the primary endpoint in both Phase 3 FORWARD-3 and FORWARD-4 trials in major depressive disorder. Alkermes shares reacted to the news, dropping 44% to $33.71 on volume of 12,46 million shares, making it the top loser today.
Kasimov commented, “While depression trials are notoriously difficult to predict, this is clearly a major disappointment, as we viewed ‘5461 as ALKS’ most important pipeline asset given the compound’s development stage and potential market opportunity. While FORWARD-5 gives ‘5461 one last gasp, we have decided to strip the asset completely out of our model. Even so, it’s important to note that ALKS has constructed a well-diversified business with a strong base franchise and higher probability assets still in the pipeline that offer intriguing long-term value. In the end, we’re left to weigh our model versus the current biotech market.”
“For now, the market wins as we see better opportunities in the near term to buy beaten down mid and large cap names where fundamentals haven’t deteriorated. Thus, we are downgrading ALKS to Neutral and stepping to the sidelines for the time being. However, we still see meaningful value for LT investors in ALKS as evidenced by our price target of $51,” the analyst concluded.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Cory Kasimov has a yearly average return of -15.7% and a 21% success rate. Kasimov has a 7.9% average return when recommending ALKS, and is ranked #3553 out of 3579 analysts.
Out of the 10 analysts polled by TipRanks, 4 rate Alkermes stock a Buy, 4 rate the stock a Hold and 2 recommend a Sell. With a return potential of 87%, the stock’s consensus target price stands at $63.14.