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Why Is Sarepta Therapeutics (SRPT) Down 4.4% Since Last Earnings Report?

·3-min read

A month has gone by since the last earnings report for Sarepta Therapeutics (SRPT). Shares have lost about 4.4% 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 Beats Q3 Earnings and Sales Estimates

Sarepta reported a loss of 60 cents per share for the third quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $1.86 per share. The loss was also narrower than the year-ago loss of $2.50 per share.

The company incurred an adjusted loss of 19 cents per share, narrower than $1.42 in the year-ago quarter. The adjusted figure excludes one-time items, depreciation & amortization expenses, interest expenses, income tax benefit, stock-based compensation expense and other items.

Sarepta recorded total revenues of $189.4 million, up 31.6% year over year. Revenues beat the Zacks Consensus Estimate of $170.1 million. The increase in revenues was driven by additional sales following the launch of Amondys 45 in February 2021 and continued demand for Sarepta’s other two drugs — Exondys 51 and Vyondys 53. The company also raised its guidance for 2021 revenues, following the strong demand for its drugs.

Quarter in Details

The company derived product revenues of $166.9 million, up 37.5% year over year.

Sales of Exondys 51, Vyondys 53, and Amondys 45 during the third quarter were $115.6 million, $26.7 million and $24.7 million, respectively. In the second quarter of 2021, sales of Exondys 51, Vyondys 53, and Amondys 45 were $112.5 million, $22.4 million and $6.9 million, respectively. Third-quarter sales reflect sequential growth for each drug.

The company recorded $22.5 million in collaboration revenues, primarily from its licensing agreement with Roche for commercialization rights of its gene therapy candidate, SRP-9001 as DMD therapy in ex-U.S. markets. Collaboration revenues were flat year over year.

Adjusted research and development (R&D) expenses totaled $115.1 million in the third quarter, down 28% year over year.

Adjusted selling, general & administrative (SG&A) expenses were $43.6 million, down 23.8% year over year.

2021 Guidance Raised

Sarepta raised its guidance for revenues in 2021, following the strong performance of its three DMD drugs in the first nine months of 2021. The company now expects product revenues to be in the range of $605-$615 million, indicating year-over-year growth of nearly 34% at the midpoint of the range. Previously, the company expected the same to be between $565 million and $575 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 39.26% 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 bottom 20% 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Sarepta Therapeutics has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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