On Thursday, Piper Sandler expressed continued confidence in Alkermes (NASDAQ:ALKS), maintaining an Overweight rating and a $37.00 price target for the biopharmaceutical company's stock. This affirmation follows a fireside chat with Alkermes' senior management during the 36th Annual Piper Sandler Healthcare Conference.
The $5 billion market cap company, which InvestingPro analysis shows is currently trading slightly below its Fair Value, has demonstrated strong financial health with an overall score of "GREAT."
The management team at Alkermes highlighted their concentrated efforts on advancing a comprehensive development program for their oral orexin 2 receptor (OX2R) agonist product candidates. The lead candidate in this suite of potential therapies is ALKS-2680, referred to as '2680.
The company's strategy focuses on driving substantial organic growth through these developments, rather than relying on business development or mergers and acquisitions. Supporting this strategy, InvestingPro data reveals the company holds more cash than debt on its balance sheet and maintains strong liquidity with a current ratio of 3.45. However, they remain open to acquiring assets that could strengthen their neuropsychiatry pipeline.
ALKS-2680 is part of a new class of treatment that is being explored for applications beyond sleep/wake disorders, which traditionally have been the focus of OX2R agonist research. Piper Sandler's analyst noted the potential for these molecules to be used in a variety of treatment settings, indicating a belief that the current understanding and application of OX2R agonists is just beginning to unfold.
In their communication, the analyst emphasized the opportunity for Alkermes to organically create transformative value with their OX2R agonist candidates. This optimism is reflected in the reiteration of the $37 price target for Alkermes, signaling an expectation for the company's stock to perform well based on these developmental efforts.
Alkermes' focus on organic growth through its OX2R agonist program represents a strategic move to advance its position in the field of neuropsychiatry. With the maintained Overweight rating and price target, Piper Sandler indicates a positive outlook for the company's stock as it continues to invest in its product pipeline.
In other recent news, Alkermes experienced a flurry of activity from various analysts. Mizuho (NYSE:MFG) Securities upgraded its stock target from $35.00 to $40.00, maintaining an Outperform rating, while Stifel raised its target to $36 and upgraded its rating to Buy. H.C. Wainwright maintained a Neutral stance with a steady price target of $37.00. Piper Sandler cut its stock target to $37.00 but kept its Overweight rating, and Goldman Sachs (NYSE:GS) revised its price target to $30.00, continuing with a Buy rating.
These adjustments came after Alkermes reported an 18% year-over-year increase in Q3 2024 revenues, reaching $378.1 million, primarily due to its proprietary products, VIVITROL, ARISTADA, and LYBALVI. The non-GAAP earnings per share for the quarter were $0.72, slightly above the estimated $0.70.
The analysts' attention was particularly drawn to the company's developmental drug, ALKS 2680, which is currently moving towards Phase 2 readouts. This drug, an OX2R agonist, is expected to significantly impact the branded narcolepsy and idiopathic hypersomnia markets.
Alkermes has also announced plans to increase 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. Despite an expected reduction in EBITDA due to changes in manufacturing and royalty revenues, Alkermes remains focused on its growth strategy.
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