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Why Is Sarepta Therapeutics (SRPT) Down 11.5% Since Last Earnings Report?

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It has been about a month since the last earnings report for Sarepta Therapeutics (SRPT - Free Report) . Shares have lost about 11.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Sarepta Therapeutics due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Sarepta Q2 Loss Widens Y/Y, Revenues Beat Estimates

Sarepta incurred an adjusted loss of $1.51 per share for the second quarter of 2020, wider than the year-ago adjusted loss of 83 cents per share. The wider year-over-year loss can be primarily attributed to a significant rise in operating expenses.

Notably, the adjusted figure excludes one-time items, depreciation & amortization expenses, interest expenses, income tax benefit, stock-based compensation expense and other items. Including all these items, the company incurred a loss of $1.93 per share, narrower than the loss of $3.74 in the year-ago quarter. The Zacks Consensus Estimate was pegged at a loss of $1.81 per share.

Sarepta recorded total revenues of $137.4 million, up 17.5% year over year. Revenues beat the Zacks Consensus Estimate of $116.62 million.

Quarter in Details

The company derived product revenues of $111.3 million, up 17.6% year over year, reflecting high demand for Exondys 51 and Vyondys 53.

However, the company stated that new patient initiations on both the drugs has been facing challenges due to the current restricted environment where physicians are facing difficulties in monitoring patients regularly. This resulted in fewer patient initiations during the quarter for both drugs.

The company recorded $26 million in collaboration revenues related to its licensing agreement with Roche for commercialization of its gene therapy candidate, SRP-9001 as DMD therapy in ex-U.S. markets.

Adjusted research and development (R&D) expenses totaled $160.4 million in the second quarter, up 83.3% year over year. The increase was primarily due to increased clinical activities related to its micro-dystrophin program, partially offset by lower clinical activities for Exondys 51 and Vyondys 53.

Adjusted selling, general & administrative (SG&A) expenses were $55.1 million, up 5.4% year over year. Higher personnel expenses increased SG&A expenses.

Sarepta stated that the impact of COVID-19 pandemic was modest during the second quarter, as evident from its product revenues. Meanwhile, the company has significant cash to continue with its clinical studies and business operation amid this pandemic. It expects the impact of the pandemic to be modest in the remainder of 2020. However, the company did not provide any outlook for the year on its earnings call due to the unpredictable nature of COVID-19.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

Currently, Sarepta Therapeutics has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Sarepta Therapeutics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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