Alkermes (ALKS): Assessing Valuation as New CFO Joshua Reed Steps In

Alkermes (ALKS) just made headlines by naming Joshua Reed as its new Chief Financial Officer, effective September 15. Given Mr. Reed’s three decades in financial leadership, including high-level stints at Omega Therapeutics and Bristol-Myers Squibb, this move signals that Alkermes is looking to strengthen its financial strategy. When a company refreshes its executive ranks, especially at the CFO level, investors often look for clues about where the business is headed. Is this the start of a new chapter for Alkermes, or a risk reset in uncertain markets?

This appointment comes after a mixed year for Alkermes. Over the past year, the stock’s performance has dipped about 3%, reflecting a period of drifting confidence. Shorter-term momentum has also faded, with shares sliding more than 5% over the past 3 months. However, the longer-term picture shows slow but steady value creation, with a three-year return of 27% and a 69% gain for those who invested five years ago. For those keeping tabs, Alkermes continues to report steady revenue, but with declining net income over the past year.

With a new CFO stepping in and shares hovering below levels seen in recent years, some may wonder if Alkermes is quietly offering an opportunity or if the market has already accounted for its growth potential.

Most Popular Narrative: 33.2% Undervalued

Alkermes is currently seen as significantly undervalued compared to its consensus fair value target, with expectations centered on future earnings power and pipeline progress.

Expanding demand and market penetration for proprietary neuroscience products, paired with commercial execution, are fueling top-line growth and increasing operating leverage. Diversified pipeline progress, margin expansion, and financial strength provide flexibility for pipeline acceleration, external growth, and sustained earnings while minimizing dilution risk.

What is behind this bullish valuation? Some standout levers are driving big numbers in this narrative, such as robust sales trends and ambitious margin targets. Want to know what earnings forecasts and future financial hurdles are baked in? The story only gets more interesting when you look deeper at the calculations behind the price tag.

Result: Fair Value of $41.59 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, even solid stories face headwinds, such as Alkermes’ reliance on a few key products and rising research and development costs that could pressure future growth.

Find out about the key risks to this Alkermes narrative.

Another View

A second approach, using our DCF model, also suggests Alkermes is undervalued. This method factors in future cash flows rather than just earnings. Could both paths really point toward the same hidden value?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Alkermes for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Alkermes Narrative

If you think there’s more to the story or want to dive into the numbers yourself, it’s easy to shape your own outlook in just a few minutes. Do it your way

A great starting point for your Alkermes research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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