Alkermes (ALKS): Evaluating Valuation After Promising Vibrance-2 Narcolepsy Drug Results

Alkermes (ALKS) just reported encouraging topline results from its Vibrance-2 phase 2 trial testing alixorexton in narcolepsy type 2. The study hit key efficacy goals and safety markers, which has sparked new attention for the company’s neurology portfolio.

See our latest analysis for Alkermes.

The recent buzz from Alkermes' positive Vibrance-2 results comes on the heels of active participation in major healthcare conferences, all while the share price remains steady at $28.69. Despite some short-term volatility, Alkermes has quietly delivered a 2.8% total shareholder return over the past year and an even stronger 58.2% total return over five years. This points to growing momentum as its pipeline advances.

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With shares trading at a discount to analysts' targets and the company posting double-digit growth in both revenue and net income, is Alkermes now an undervalued pick, or has the market already priced in its next move?

Most Popular Narrative: 34.8% Undervalued

At $28.69, Alkermes’ latest closing price sits well below the $44 fair value estimate outlined in the most widely followed narrative. This creates a striking gap between narrative optimism and current market skepticism.

Robust, above-expectation demand growth for Alkermes' proprietary neuroscience products (Vivitrol, Aristada, and Lybalvi), supported by expanding diagnosis rates and increased patient access through Medicaid and insurance, drives outsized revenue expansion and positions the company for continued top-line growth as global awareness of mental health disorders rises.

Read the complete narrative.

Curious what fuels this bold upside? The fair value leans on ambitious assumptions about top-line acceleration, operating leverage, and a leap in future profit multiples. The secret sauce is surprising financial forecasts the consensus believes set Alkermes apart from other biotech names. See the full breakdown driving this price call.

Result: Fair Value of $44 (UNDERVALUED)

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

However, there are still risks, such as rising R&D costs and unproven durability of recent revenue gains, which could challenge this bullish scenario.

Find out about the key risks to this Alkermes narrative.

Build Your Own Alkermes Narrative

If the consensus viewpoint does not match your perspective, or you prefer a hands-on approach, you can craft your own narrative in just a few minutes: Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Alkermes.

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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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