On Wednesday, a Jefferies analyst increased the price target on shares of Alkermes (NASDAQ:ALKS), a biopharmaceutical company traded on NASDAQ:ALKS, to $50.00 from the previous $42.00. The firm has maintained a Buy rating on the stock.
The adjustment follows the release of promising data related to Alkermes' investigational drug, ALKS-2680, which is being developed for the treatment of narcolepsy.
The analyst highlighted the significance of the new data from ALKS-2680, particularly noting the positive results in narcolepsy type 2 patients, where placebo-adjusted Maintenance of Wakefulness Test (MWT) scores improved by 12 to 21 minutes. This improvement occurred without a clear dose-response relationship between the 12mg and 25mg doses.
Additionally, the data for idiopathic hypersomnia (IH) was described as encouraging, though the company is not advancing the 25mg dose due to issues related to iris relaxation. However, Alkermes has not dismissed the potential for future development.
Furthermore, the safety profile of ALKS-2680 was considered favorable, with only two mild and transient cases of visual disturbance or photophobia reported at the 25mg dose. This suggests a dose-dependent safety profile, and as a result, Alkermes is not proceeding with the 25mg dose. Importantly, there were no driving restrictions in the phase 2 trial of the drug.
The analyst's increased price target is also based on an upward revision of the projected sales for ALKS-2680. The projected sales have been raised from $700 million to $1 billion, with a probability of success estimated at 50%.
InvestingPro Insights
Following the upbeat analyst report on Alkermes, real-time data from InvestingPro provides a deeper financial perspective on the company. Alkermes holds a market capitalization of approximately $4.52 billion, reflecting its significant presence in the biopharmaceutical industry. The company's P/E ratio stands at a moderate 12.39, with an even more attractive adjusted P/E ratio for the last twelve months as of Q4 2023 at 8.58. This suggests that the stock may be undervalued relative to its earnings.
The robust revenue growth of nearly 49.61% in the same period indicates a strong upward trajectory in Alkermes' financial performance. Additionally, with a gross profit margin of 84.79%, the company demonstrates a high level of efficiency in managing its production costs relative to sales. Notably, Alkermes does not distribute dividends, which may appeal to investors who prefer companies that reinvest earnings back into the business.
InvestingPro Tips for Alkermes highlight the company's strong financial health, with more cash than debt on its balance sheet and a valuation that implies a strong free cash flow yield. These factors, combined with the ability to cover interest payments comfortably and liquid assets exceeding short-term obligations, paint a picture of a company with a solid financial foundation. For investors interested in diving deeper into Alkermes' financials, InvestingPro offers additional tips that can be accessed at https://www.investing.com/pro/ALKS. To further enrich your investment strategy, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the 6 additional InvestingPro Tips available for Alkermes.
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