2 Opposing Views On The Future Of Sarepta

Sarepta Therapeutics Inc SRPT, a biopharmaceutical company that focuses on the treatment of rare diseases, such as Duchenne Muscular Dystrophy (DMD), has become one of the most debated stocks of 2016.

After bottoming at $8 per share in early 2016 the stock soared as high as $63.73 after the company won approval from the U.S. Food and Drug Administration for its drug to treat DMD called Exondys 51.

Sarepta's stock has since fallen below the $30 per share mark. Wall Street analysts are conflicted on the stock heading into 2017.

Leerink: Sarepta Is Now Worth $33 Per Share

Joseph Schwartz of Leerink maintained a Market Perform rating on Sarepta's stock on Tuesday with a price target slashed to $33 from a previous $55.

According to Schwartz, Sarepta has yet to announce launch metrics for its therapy and will do so in January. Unfortunately, the analyst is expecting the company to disappoint the Street. In fact, the analyst believes Exondys 51 needs to be one of the biggest orphan drug launches ever in order to match consensus estimates.

Schwartz spoke with Sarepta's management team who said they're still considering which metrics it will provide the Street to better communicate launch progress.

"It sounds as if patient start forms will still be front and center, although SRPT also expects to address reimbursement patterns," the analyst wrote. "How this will be done is unclear, but the company's goal is to help investors understand the dynamics of the launch and the steps needed for patients to get on drug, so that investors can put current trends into context with the overall market opportunity."

The analyst highlighted that his checks with medical payors indicate a "wide range of reimbursement behavior" and range from denials for all patients to a more accomodative stance from others.

Bottom line, Schwartz argued there's so much commercial uncertainty ahead of the launch that the stock is appropriately valued at its current levels.

JPMorgan: Sarepta Is a $40 Stock

Analysts at JPMorgan initiated coverage of Sarepta on Thursday with an Overweight rating and $40 price target.

The analysts cited the negative sentiment surrounding Sarepta's business ahead of the launch of its therapy. The analysts also acknowledged their own feedback from payers has been mixed.

Moreover, the analysts stated Wall Street will "re-calibrate to a more appropriate launch trajectory" in the first or second quarter which will keep the stock range-bound and volatile in the first half of next year.

However, Sarepta's stock could rebound in the bottom half of 2017 due to greater clarity on market dynamics and by giving the company more time to work with payers and pipeline data.

"We do believe patience will be required and that there is a valuation argument to be made from current levels," the analysts argued.