Considerable strength remains visible among biotechnology stocks, as reflected by the 1.8 percent gain being posted by the iShares NASDAQ Biotechnology Index yesterday. Among the equities in focus today are controversial drug giant Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and rival DMD drug maker Sarepta Therapeutics Inc (NASDAQ:SRPT).
Valeant Pharmaceuticals Intl Inc
Morgan Stanley analyst David Risinger weighed in on Valeant Pharmaceuticals following presentation at the UBS Global Healthcare Conference in New York, where CEO Joe Papa referenced “speed bumps” associated with the current partnership with Walgreens.
Risinger noted, “With U.S. derm representing ~21% of US revenue and ~15% of global, the Walgreens program remains a key initiative for driving growth. Following an initial prescription bounce in Jan-Feb ’16, script trends moderated and management has said the company is working through “speed bumps. Recall the Walgreens partnership has two phases. The first phase involves transitioning Philidor alternate fulfillment (primarily for dermatology drugs) to Walgreens. The second involves prescription filling of certain Valeant brands at generic prices, which is supposed to roll out in 2H:16. Walgreens is covered by Ricky Goldwasser.”
Risinger reiterated an Equalweight rating on shares of Valeant with a price target of $39, which implies an upside of 33% from current levels.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst David Risinger has a yearly average return of 1.2% and a 60% success rate. Risinger has a -4.4% average return when recommending VRX, and is ranked #1663 out of 3986 analysts.
Out of the 21 analysts polled by TipRanks (in the past 3 months), 7 rate Valeant stock a Buy, 10 rate the stock a Hold and 4 recommend a Sell. With a return potential of 62.5%, the stock’s consensus target price stands at $47.79.
Sarepta Therapeutics Inc
Jefferies analyst Gena Wang reiterated an Underperform rating on shares of Sarepta Therapeutics, with a price target of $7.00, following a call with FDA regulatory expert Dr. Brian Harvey on PDUFA postponement for eteplirsen.
Wang stated, “Given the weak data set for eteplirsen, our KOL sees significant consequences might be incurred if the FDA approves the drug. Based on current law, the standard of evidence is not lower for accelerated approval based on surrogate endpoints. If the FDA decides to approve eteplirsen based on the weak data set (according to the FDA clinical review team), other companies that received CRL in DMD and other orphan diseases might view a high-level inconsistency in the review process. In addition, the approval might impact on the clinical trial design in orphan diseases and shift the focus from statistical-oriented to more patient-focused. Our KOL noted that congress could get involved more productively through amending current laws to allow a lower standard for orphan diseases (vs. sending open letters to the FDA).”
Bottom line: “We continue to see a slim chance of approval given likely data-driven decision by the FDA under current laws.”
According to TipRanks.com, analyst Gena Wang has a yearly average return of -12.1% and a 38.5% success rate. Wang has a -35.9% average return when recommending SRPT, and is ranked #3638 out of 3986 analysts.
Out of the 14 analysts polled by TipRanks (in the last 3 months), 5 rate Sarepta stock a Buy, 4 rate the stock a Hold and 5 recommend a Sell. With a potential downside of nearly 17%, the stock’s consensus target price stands at $17.71.