The company will meet with the FDA to discuss an accelerated approval, and most analysts are optimistic that the drug will hit shelves soon. The stock is priced at $27.80, down from its $45.00 October high, and I anticipate a move higher to the mid-high $30s by the end of February. Right now, the stock has price targets from $54 to $83 based on price/peak sales between 2 and 3. However, I tend to believe that if approved and if commercially successful that Sarepta will enjoy the same value/revenue metrics that are seen in stocks such as Alexion Pharmaceuticals, Regeneron Pharmaceuticals, and BioMarin Pharmaceuticals at or around 10x sales. Therefore, if Sarepta’s drug is approved, reaches annual sales of $500 million within three years, and finds a partnership for global development, then prices near $200 are not out of the question, if all pieces fall into place.
In my opinion, both of these two stocks are greatly undervalued. Sarepta has one of the best technologies in biotechnology and if the FDA meeting goes well then gains won’t be far behind, neither will large pharma. XPO Logistics is the best kept secret on Wall Street, although soon it will be realized. I urge investors to take time and research both stocks to see if either fits into your portfolio. At that point you can make an educated decision, and will most likely see the clear upside in shares of these two stocks.
The article Two Small-Cap Stocks to Trade Considerably Higher in February originally appeared on Fool.com and is written by Brian Nichols.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.