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Alkermes (ALKS) Outlines Value Enhancement Plan, Shares Up

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  • ALKS
  • ARPO
  • ALIM

Alkermes Inc.’s (ALKS) shares jumped 12.7% after the company announced a Value Enhancement Plan, designed to drive growth, improve operational and financial performance, as well as enhance shareholder value. On a further encouraging note, shares of the company have increased 1.4% year to date compared with the industry’s 6.9% growth.

The plan includes a commitment to multi-year profitability targets, review and optimization of the company's cost structure, potential monetization of non-core assets, as well as persistent governance enhancements.

Management's goal is to improve margins over the next few years so that its adjusted net income is 25% of 2023 revenues, with earnings before interest, taxes, depreciation and amortization (EBITDA) margin of 20% of 2023 revenues. The company is looking to further boost margins in 2024, with net income making up 30% of 2024 revenues and an EBITDA margin of 25% of 2024 revenues.

It is also undertaking several initiatives to meet these goals, including reorganization of the commercial infrastructure, which was implemented in November 2020. As part of the reorganization, several functional areas within Alkermes’ commercial organization were consolidated to improve efficiencies. About 80 full-time positions were reallocated to support the potential approval and launch of its schizophrenia and bipolar I disorder drug ALKS 3831, reducing the need for the previously planned new hires.

The company has also started an in-depth review of operations and structure, both internally and in collaboration with external advisors, to identify potential areas for improved efficiencies.

Management also plans to license or sell non-core assets and the company is exploring a strategic collaboration for ALKS 4230, an immuno-oncology drug, which will cut costs further.

Finally, Alkermes has committed to refreshing the board of directors, a process that has already started with the appointment of two new independent directors. The board plans to add at least one additional director in first-half 2021.

The company plans to provide an update on the findings and planned initiatives resulting from the ongoing review following its conclusion, expected in first-quarter 2021.

Alkermes plc Price

Alkermes plc Price
Alkermes plc Price

Alkermes plc price | Alkermes plc Quote

Zacks Rank & Stocks to Consider

Alkermes currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the healthcare sector include Aerpio Pharmaceuticals Ltd. ARPO, Axovant Sciences Inc. SIOX and Alimera Sciences Inc. ALIM, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Aerpio’s loss per share estimates have narrowed from 15 cents to 14 cents for 2020 and from 63 cents to 57 cents for 2021 over the past 60 days.

Axovant’s loss per share estimates have narrowed from $1.15 to 95 cents for 2020 and from $1.37 to $1.14 for 2021 over the past 60 days.

Alimera’s loss per share estimates have narrowed from $1.31 to 96 cents for 2020 over the past 60 days.

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Alkermes plc (ALKS) : Free Stock Analysis Report
 
Alimera Sciences, Inc. (ALIM) : Free Stock Analysis Report
 
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