Analyst Says Buy This Pharma Stock Before Earnings

Sarepta Therapeutics earnings are due next Thursday

Nov 1, 2019 at 12:06 PM
facebook twitter linkedin

Sarepta Therapeutics Inc (NASDAQ:SRPT) stock is up 4.3% today to trade at $86.63, after Guggenheim initiated coverage with a "buy" rating and a $183 price target -- a 120% premium to last night's close. This bull note comes ahead of the Duchenne muscular dystrophy (DMD) specialist's turn in the earnings confessional, slated for after the market closes next Thursday, Nov. 7.

Most analysts are already upbeat toward SRPT stock. Prior to today, 14 brokerages maintained a "buy" or better rating on the equity, compared to one "hold," and not a single "sell." Plus, the average 12-month price target of $187.86 represents expected upside of 116.9% to current trading levels.

Skepticism has been ramping up in other corners of the Street, though. Short interest on SRPT surged 7.6% in the most recent reporting period to 15.59 million shares -- the most since July 2016. These bearish bets represent 22% of Sarepta Therapeutics stock's available float, or 9.2 times the average daily pace of trading.

Historically speaking, SRPT stock tends to do well after earnings, having closed higher the day after five of the drugmaker's past eight quarterly events. SRPT has averaged a next-day move of 6.6% over the last two years, regardless of direction, with the options market pricing in a slimmer 6.2% swing for Friday's trading.

Looking at the charts, Sarepta Therapeutics stock has struggled in the second half of 2019, down nearly 46% from its July 15 annual high of $158.80 -- due in part to a late-August bear gap sparked by the Food and Drug Administration's (FDA) failure to approve the company's DMD injection treatment. More recently, the equity has recovered from its Sept. 26 52-week low at $72.05, but is struggling to break out above its 50-day moving average.

srpt stock daily price chart on nov 1



Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

Best stocks for October and worst stocks for October


Special Offers from Schaeffer's Trading Partners