Alkermes Rating Downgraded to Sell Amid Pipeline Concerns
Alkermes plc (NASDAQ: NASDAQ:) faced a downgrade in its stock rating by UBS on Tuesday, shifting from ‘Neutral’ to ‘Sell’. Though the price target remains at $25.00, this decision comes amidst worries about the company’s pipeline updates and launch performances.
Trading close to its 52-week high, Alkermes is experiencing a negative risk/reward scenario according to UBS, driven by pipeline updates and launch performance concerns. The stock valuation seems optimistic and may be factoring in higher projected sales for the year 2029 than UBS’s base case projection. These higher expectations imply the need for flawless clinical outcomes for their orexin program and strong growth for Lybalvi.
UBS has expressed specific caution regarding the upcoming phase 1 read-out of ALKS-2680, Alkermes’ orexin agonist, expected in the first half of 2024. UBS is particularly concerned about potential significant tolerability issues with a higher dose in the Phase 1 narcolepsy type 2 (NT2) and Idiopathic Hypersomnia study.
Furthermore, indications exist that the growth of Lybalvi, Alkermes’ drug for schizophrenia and bipolar I disorder treatment, may be slowing down. UBS projects that sales for Lybalvi from fiscal years 2024 to 2027 could be roughly 12% below consensus estimates, potentially leading to downward revisions of market expectations.
This detailed analysis enlightens potential investors and current stakeholders about the inner workings of Alkermes and the factors impacting its current standing in the market.
