On Friday, Piper Sandler adjusted its price target on shares of Alkermes (NASDAQ:ALKS), a biopharmaceutical company, to $37.00 from the previous target of $38.00. The firm maintained its Overweight rating on the stock amidst the company's latest financial results.
Alkermes reported its third-quarter 2024 non-GAAP earnings per share (EPS) at $0.72, slightly above the estimated $0.70, on revenues of $378.1 million, which was narrowly below the expected $380.9 million. Despite the mixed results, the company's management confirmed its full-year 2024 guidance.
Looking ahead, Alkermes provided insights into its plans for 2025, indicating an increase in research and development (R&D) and selling, general, and administrative (SG&A) expenses. The increased spending is attributed to the development of their orexin pipeline and promotional efforts for Lybalvi, their treatment for schizophrenia and bipolar I disorder.
The firm's analyst noted that with Alkermes' enterprise value to estimated 2025 EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio ranging from approximately 10 to 11 times, and a revised EBITDA estimate of $392 million, down from $545 million, the company's stock is still considered an attractive investment.
The valuation reflects Alkermes' status as a cash-generating, multi-product central nervous system (CNS) business with potential growth from its orexin 2 receptor (OX2R) agonist pipeline.
The pipeline includes ALKS-2680, which is expected to release Phase II data in the second half of 2025, and two additional OX2R agonists set to enter clinical trials in the same year. Piper Sandler's stance reiterates the firm's confidence in Alkermes' long-term prospects despite the marginal adjustment in the price target.
In other recent news, Alkermes Plc has reported an 18% year-over-year increase in total revenues for Q3 2024, reaching $378.1 million. This growth was primarily driven by the performance of its proprietary products, VIVITROL, ARISTADA, and LYBALVI.
Despite an expected reduction in EBITDA from approximately $400 million to over $200 million due to changes in manufacturing and royalty revenues, Alkermes remains focused on its growth strategy.
In addition, the company has received updated price targets from Goldman Sachs (NYSE:GS) and Leerink Partners, with the former lowering its target to $30.00 from $32.00 but maintaining a Buy rating, and the latter maintaining its Market Perform rating and $28.00 price target. Both firms highlighted the company's recent financial performance and future strategies in their analysis.
Furthermore, Alkermes is strategically focusing on its ALKS-2680 program, with Phase 2 studies underway and significant data readouts expected in the second half of 2025. This program, targeting conditions such as narcolepsy types 1 and 2 and idiopathic hypersomnia, is seen as a promising aspect of the company's pipeline.
These recent developments underscore Alkermes' commitment to driving growth through its proprietary product portfolio and its strategic focus on future profitability and expansion.
InvestingPro Insights
To complement Piper Sandler's analysis, recent data from InvestingPro offers additional context on Alkermes' financial position and market performance. The company's market capitalization stands at $4.34 billion, with a price-to-earnings (P/E) ratio of 12.18, suggesting a relatively modest valuation compared to its earnings. This aligns with the InvestingPro Tip that Alkermes is "Trading at a low P/E ratio relative to near-term earnings growth," which could be attractive to value-oriented investors.
Notably, Alkermes reported a revenue of $1.51 billion over the last twelve months, with a strong gross profit margin of 83.17%. This robust margin supports the company's ability to invest in R&D and promotional activities for products like Lybalvi, as mentioned in the article.
An InvestingPro Tip highlights that "Management has been aggressively buying back shares," which may indicate confidence in the company's future prospects and could potentially support share prices. This action aligns with the firm's status as a cash-generating business, as noted by Piper Sandler's analyst.
For investors seeking more comprehensive analysis, InvestingPro offers 8 additional tips for Alkermes, providing a deeper understanding of the company's financial health and market position.
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