Alkermes (ALKS) PT Raised to $70 at Credit Suisse
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Credit Suisse analyst Vamil Divan reiterated an Outperform rating and raised its price target on Alkermes (NASDAQ: ALKS) to $70.00 (from $52.00) after the company released positive data after the close from the third Phase 3 study for their pipeline anti-depression drug ALKS-5461.
Divan commented, "We had removed the product from our model after the first two Phase 3 studies failed but, given the positive results, we now add it back in with a 60% probability of success. We assume a peak sales potential of $1.2Bn given the unmet need in treatment-resistant depression, leading to probability-adjusted sales of $750MM in our model in 2023. After incorporating expected additional expenses that we believe would be necessary to successfully commercialize the asset, our DCF for ALKS increases to $71. Our blended 12-month target price increases to $70 (from $52) and is 75% driven by the $71 DCF while incorporating a 25% component of relative valuation ($67, based off a 3.5x multiple of our assumed total company peak sales of ~$3Bn). Our 2017-2019 EPS estimates come down modestly given the additional expense we are now adding into the model."
Shares of Alkermes closed at $43.51 yesterday.
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