Sarepta: SRPT Stock To $40?

Forbes

29-07-2025

POLAND - 2025/01/25: In this photo illustration, the Sarepta Therapeutics company logo is seen ... More displayed on a smartphone screen. (Photo Illustration by Piotr Swat/SOPA Images/LightRocket via Getty Images)
Sarepta Therapeutics is trading around $19 in extended hours following the FDA's decision to remove the pause on Elevidys, marking a critical turning point for the beleaguered biotech. This regulatory relief, combined with several other compelling catalysts, creates a pathway for the stock to potentially double from current levels to around $40 after its dramatic fall from levels of $170. Now, if you are looking for an upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception. On a separate note, see – QuantumScape: QS Stock To $0?
Structural Cost Improvements Drive Profitability
The company's aggressive restructuring plan, including 500 job cuts and program discontinuations, generates over $400 million in annual cost savings by 2026. This dramatic expense reduction transforms Sarepta's financial profile from a cash-burning operation to a potentially profitable entity. With Elevidys generating substantial revenues despite current restrictions, the leaner cost structure could deliver significant margin expansion once regulatory issues stabilize.
FDA Pause Removal Unlocks Revenue Potential
The FDA's decision to remove the pause on Elevidys represents the most significant positive catalyst for Sarepta's recovery. This regulatory relief immediately restores access to the full patient population and removes the overhang that has pressured the stock. With Elevidys generating over 40% of Sarepta's total revenues, the resumption of unrestricted commercial use could quickly restore investor confidence and drive substantial revenue growth in the coming quarters.
Duchenne Franchise Stability
Beyond Elevidys, Sarepta maintains a diversified Duchenne portfolio that continues generating steady revenues. This foundation provides cash flow stability while the company addresses gene therapy challenges. The established market position in rare disease treatments offers defensive characteristics that could support valuation recovery.
Potential Acquisition Target
Sarepta's current distressed valuation makes it an attractive acquisition candidate for larger pharmaceutical companies seeking gene therapy capabilities. The company's expertise, intellectual property, and market-leading position in Duchenne treatments could command significant premiums in a takeover scenario.
Risks That Could Derail Doubling Potential
Several critical risks could prevent Sarepta from achieving double-digit returns and potentially drive further declines.
The ongoing FDA investigation into patient deaths, while concerning, appears to have been addressed sufficiently for the agency to lift restrictions. However, any new safety signals could trigger renewed regulatory scrutiny.
Financial sustainability concerns persist despite restructuring efforts. The company maintains a debt-to-equity ratio of 63% with $1.3 billion in obligations. Extended regulatory delays could strain cash reserves and force additional dilutive financing or asset sales.
Competition from alternative Duchenne treatments could erode market share, particularly if safety concerns create opportunities for rival therapies to gain regulatory and physician preference.
The extreme volatility demonstrated by Sarepta's stock movements from $172 to recent lows shows how quickly investor sentiment can shift. Any negative developments could trigger disproportionate selling pressure, making the doubling thesis dependent on near-perfect execution across multiple fronts.
The Verdict
Sarepta's path to doubling hinges primarily on the FDA's pause removal creating sustained revenue recovery for Elevidys, supported by the company's aggressive cost restructuring that could deliver significant margin expansion. That said, investors must weigh this against the inherent volatility and regulatory risks that have defined the stock's recent performance. The company's transformation into a leaner, more focused organization positions it well for recovery, but success requires flawless execution in maintaining regulatory compliance while maximizing the commercial potential of its core Duchenne franchise. There always remains a meaningful risk when investing in a single, or just a handful, of stocks. Consider the Trefis High Quality (HQ) Portfolio which, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.