Back to top

Image: Bigstock

Why Is Sarepta Therapeutics (SRPT) Down 33.1% Since Last Earnings Report?

Read MoreHide Full Article

It has been about a month since the last earnings report for Sarepta Therapeutics (SRPT - Free Report) . Shares have lost about 33.1% 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 catalysts.

Sarepta Q2 Loss Widens Y/Y, Revenues Up

Sarepta incurred an adjusted loss of 83 cents per share in the second quarter of 2019, wider than the year-ago loss of 43 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, and income tax benefit. Including all these items, the company incurred a loss of $3.74 per share compared with a loss of $1.67 in the year-ago quarter. The Zacks Consensus Estimate was pegged at a loss of $1.08.

Meanwhile, Sarepta’s Exondys 51 continued with its strong performance. The company derives revenues solely from the sale of Exondys 51. Sarepta recorded total revenues of $94.7 million, up 8.9% sequentially, which beat the Zacks Consensus Estimate of $91.26 million. In the prior-year quarter, Sarepta had earned revenues of $73.5 million.

Operating Expenses

Adjusted research and development (R&D) expenses totaled $87.5 million in the second quarter, up 53.5% year over year. The increase was primarily due to the ramp-up of manufacturing activities for micro-dystrophin program and progress of clinical development related to gene therapies, the PPMO platform and casimersen. The rise in R&D expenses was partially offset by lower cost related to clinical studies evaluating Exondys 51 and golodirsen and winding down of activities on Utrophin platform by Sarepta’s partner, Summit.

Adjusted selling, general & administrative (SG&A) expenses were $52.3 million, up 40.2% year over year. Higher costs related to the global commercial expansion of its products and increased personnel expenses led to the rise in SG&A expenses.

Cost of sales was also higher, reflecting higher inventory costs due to rising demand for Exondys 51 and royalty payments to BioMarin per the terms of the 2017 settlement and license agreements related to the latter’s exon-skipping technology used in DMD therapies.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -27.79% due to these changes.

VGM Scores

At this time, Sarepta Therapeutics has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Sarepta Therapeutics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Sarepta Therapeutics, Inc. (SRPT) - free report >>

Published in