Why Did Sarepta Stock Jump 20% On Tuesday? Here’s What JPMorgan, Bernstein, Barclays Said About Elevidys

Shares of Sarepta Therapeutics Inc. (SRPT) traded 20% higher on Tuesday afternoon after the U.S. Food and Drug Administration (FDA) allowed the company to resume shipping Elevidys, its gene therapy for Duchenne muscular dystrophy, to children who are still able to walk.

Elevidys is the first and only gene therapy approved in the U.S. for Duchenne muscular dystrophy, a rare and progressive condition that affects mainly boys and leads to loss of muscle function.

Sarepta has been in a quagmire ever since the company reported the deaths of two patients treated with Elevidys from liver failure earlier this year.

Sarepta had paused Elevidys' shipments last week to allow the FDA to complete a review of available safety information. The company is still in discussions with the FDA regarding an updated safety labeling on Elevidys. The pause on Elevidys for patients who cannot walk continues as the discussions linger on.

On Monday, the company said that the death of an 8-year-old boy in Brazil was deemed unrelated to treatment with Elevidys by the FDA.

On Stocktwits, retail sentiment around SRPT is trending in the ‘extremely bullish’ territory, while message volume jumped from ‘high’ to ‘extremely high’ levels over the past 24 hours.

After the hold was lifted on Monday, several analysts expressed relief or more concerns.  

JPMorgan upgraded Sarepta to ‘Neutral’ from ‘Underweight’ with a $24 price target. The FDA's recommendation to remove the voluntary pause of shipments of Elevidys in ambulatory patients is a "clear win" for the company, the analyst said.

Bernstein, meanwhile, believes "it is only a matter of time before we learn of a death in an ambulatory patient that is deemed to be Elevidys-related."

BMO Capital noted that while the financial overhang is partially removed with the lift of the hold, it expects a certain "hesitancy" from physicians and patients for Elevidys treatment in the near term.

Barclays analyst Gena Wang, meanwhile, upgraded Sarepta to ‘Equal Weight’ from ‘Underweight’ with a price target of $22, up from $10. The suspension removal "removes the worst-case scenario" of a sustained period of Elevidys being off the market, and major liquidity risk is removed for now, it said, while adding that it is looking at greater FDA clarity.

SRPT stock is down by 86% this year and by about 89% over the past 12 months.

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