The Street Is Misreading Sarepta's Guidance

Sarepta Therapeutics Inc's SRPT rough Tuesday carried over into Wednesday's session after the company reported a better than expected loss in its fourth quarter but expects full year sales of Exondys to fall short of what analysts were expecting.

Brian Skorney of Baird commented in a report the investment community is misreading Sarepta's guidance. Specifically, the company guided its Exondys sales to be at least $80 million, which is indeed below the Street's expectations of $130 million.

See Also: RBC: Sarepta's Setting The Bar Low, Buy On This Weakness

Investors may have valid reason to question where the $80 million number comes from, but the analyst noted a revenue estimate of at least $80 million doesn't mean a revenue estimate of around $80 million.

"We think this is more of an indication of the current run rate given patients either already on or reasonably expected to be on therapy shortly," Skorney wrote. "Now that the drug has been on the market for a few months, conversion rates are improving and coverage policies are easing, allowing patient starts to accelerate month-over-month."

Skorney noted he remains confident full-year sales will "easily exceed" $80 million in 2017 and a "reset on expectations" is likely to remove some revision headwinds facing the stock.

Bottom line, the analyst argued the market has "completely misread" the guidance and is viewing the $80 million figure as an "expectation" - and not the "floor" that it is.