H.C. Wainwright has a ‘Sell’ rating on the stock and a $5 price target, representing a near 75% downside from the stock’s closing price on Wednesday.
H.C. Wainwright stated on Thursday that Sarepta Therapeutics’ (SRPT) recent divestiture in Arrowhead (ARWR) weakened its credibility in capital allocation.
The firm also highlighted concerns that Sarepta’s late-stage and commercial portfolio may not generate sufficient near-term cash to support its current debt and pipeline ambitions.
H.C. Wainwright has a ‘Sell’ rating on the stock and a $5 price target, representing a near 75% downside from the stock’s closing price on Wednesday. The brokerage noted that Sarepta fully unwound its equity position in Arrowhead less than a year after investing $325 million in the stock. The unwinding represented a 31% decline as compared to the purchase price, it added.
On Stocktwits, retail sentiment around the stock trended in the ‘bullish’ territory over the past 24 hours, while message volume remained at ‘low’ levels. Retail chatter around the stock jumped 131% over the past 24 hours, as of Thursday morning.
A Stocktwits user expressed optimism about Sarepta selling its investment in Arrowhead.
Another user hopes the stock will hit $30 by next week.
Sarepta on Wednesday said that it sold about 9.27 million shares of common stock of Arrowhead in a privately negotiated block trade from which it expects to receive at least $174 million in gross proceeds.
The company also said that it has entered into an agreement with Arrowhead under which it will transfer over 2.66 million shares of Arrowhead back to the company to satisfy a $50 commitment of a $100 milestone payment obligation. The remaining $50 million will be received in cash, Arrowhead said. Sarepta previously owned 11.93 million shares of Arrowhead stock.
Sarepta’s gene therapy, Elevidys, a medicine intended for the treatment of Duchenne muscular dystrophy (DMD), created safety concerns following the death of two patients after treatment earlier this year. Both non-ambulatory patients suffered from acute liver failure. Sarepta has now resumed shipments for ambulatory individuals after a temporary pause initiated in late July. The company is now working with the FDA on the safety labelling process and risk-mitigation approach for non-ambulatory individuals.
However, SRPT stock is down by 84% this year and by 85% over the past 12 months.
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