On Monday, Stifel made a bullish move on Alkermes (NASDAQ:ALKS), shifting its stock rating from Hold to Buy and significantly raising the price target to $36 from the previous $25. The upgrade comes after a thorough analysis of the company's orexin program, particularly the ALKS2680 candidate.
The Stifel analyst expressed a strong belief in ALKS2680's potential success and its differentiation from competitor TAK-861 in the treatment of narcolepsy type 1 (NT1). The optimism extends to the possibility of ALKS2680 succeeding in narcolepsy type 2 (NT2) and idiopathic hypersomnia (IH), areas where TAK-861 did not show positive results.
Safety concerns regarding "visual disturbances" associated with ALKS2680 were also addressed. The analyst indicated a level of reassurance based on analogs, suggesting that the safety profile is likely manageable. This, combined with a large market opportunity for orexin agonists, underpins the positive outlook for Alkermes.
The revision of consensus estimates for Alkermes' base business following the third quarter of 2024 financial results has also contributed to the improved stance. With expectations now recalibrated, the analyst sees a more favorable setup for the stock.
In other recent news, Alkermes Plc reported an 18% year-over-year increase in Q3 2024 revenues, reaching $378.1 million, primarily driven by its proprietary products, VIVITROL, ARISTADA, and LYBALVI. The company's non-GAAP earnings per share for the quarter stood at $0.72, slightly above the estimated $0.70. Alkermes also confirmed its full-year 2024 guidance despite mixed results. Looking forward, Alkermes plans to increase its research and development expenses in 2025, particularly for the development of their orexin pipeline and promotional efforts for Lybalvi, their treatment for schizophrenia and bipolar I disorder.
H.C. Wainwright, Piper Sandler, Goldman Sachs (NYSE:GS), and Leerink Partners have all updated their price targets for Alkermes, reflecting various ratings and analyses. Despite an expected reduction in EBITDA due to changes in manufacturing and royalty revenues, Alkermes remains focused on its growth strategy.
InvestingPro Insights
Recent data from InvestingPro offers additional context to Stifel's bullish stance on Alkermes (NASDAQ:ALKS). The company's market capitalization stands at $4.32 billion, with a P/E ratio of 13.4, suggesting a potentially undervalued position relative to earnings. This aligns with an InvestingPro Tip indicating that Alkermes is trading at a low P/E ratio relative to its near-term earnings growth, which could support Stifel's optimistic price target.
Furthermore, Alkermes' financial health appears robust, with InvestingPro data showing the company holds more cash than debt on its balance sheet. This strong liquidity position could provide the necessary resources to support the development of promising candidates like ALKS2680, which is crucial for the company's future growth as highlighted in the Stifel analysis.
It's worth noting that InvestingPro offers 10 additional tips for Alkermes, providing investors with a more comprehensive view of the company's financial landscape and potential. These insights could be particularly valuable as the market anticipates the pivotal phase 2 results for ALKS2680 in 2025.
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