Are Alkermes Analysts Chasing This Story Too Hard, or Is It Just a Start?

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Alkermes PLC (NASDAQ: ALKS) saw its shares surge on Friday after positive news on ALKS 5461 for depression in Phase 3 studies. This was for patients who do not respond to standard care. Shares were up almost 35% at $58.60 earlier on Friday, but Alkermes backed handily off its $59.36 high to close up 27.8% at $55.62.

What stood out to 24/7 Wall St. was that the 14 million shares was almost 14 times normal trading volume. Note also that too many analysts to count jumped on the upgrade or price target hike bandwagon on Friday. Is it possible that analysts are now behind the curve on Alkermes? Or worse, are they chasing their expectations too high?

Alkermes also now has a $8.4 billion market cap and analysts see 2017 as the year that earnings will go to positive.

The study met its pre-specified primary endpoint showing treatment with ALKS 5461 significantly reduced symptoms of depression in patients with major depressive disorder (MDD) compared to placebo. Alkermes now plans to request a meeting with the U.S. Food and Drug Administration’s Division of Psychiatric Products to discuss the filing strategy for this Fast Track designated medicine.

After the stock added $3 billion in market cap at one point on Friday, 24/7 Wall St. wanted to show just how much some of these analyst targets have gone up.

Jefferies already had a Buy rating, but they raised its target to $70 from $62. The firm’s view is that this was the third of three Phase 3 studies to assess efficacy of ALKS 5461. On its success the firm is adding potential ALKS 5461 revenues into its model, but Jefferies did assign a 50% risk discount for regulatory risk.

Leerink had an Outperform rating and raised its price target to $70 from $57. Leerink was surprised by the news, admitting that the firm had been previously cautious on the third Phase 3 as it was challenging to garner much conviction after disappointing results from the prior FORWARD-3 and -4 studies.

Barclays assumed coverage with an Overweight rating and a $66 price target.

Citigroup has a Neutral rating but raised its target to $62 from $53.

Credit Suisse reiterated its Outperform rating but raised its price target to $70 from $52.

Goldman Sachs had a Neutral rating but raised its target price to $48 from $35.

JPMorgan raised its rating to Overweight from Neutral, and the firm took its target price up to $78 from $51 in that call.

We even saw that Moody’s keyed on the credit ratings view and said that the Forward-5 trial is credit-positive for its prospects (Ba3 Corporate Family Rating).

After a $55.62 closing price from Friday, Alkermes still has a 52-week range of $27.14 to $80.71.

This 14 million plus share trading volume on Friday looks like it was the largest volume day of 2016, even if we include the 12.46 million shares that traded on January 21 — and that was when shares tanked to under $35 after having been at $60.

The new consensus analyst price target from Thomson Reuters is $63.55, but that is now up from $51.36 just a month ago. Alkermes had a consensus analyst target price of $50.82 just 60 days ago and $48.09 90 days ago.

What a difference a day can make, and now it has a new week to digest the news. Stay tuned.