Sarepta Q1 Earnings Crush Estimates on ELEVIDYS Catch-Up

What happened

Sarepta reported Q1 2026 EPS of $3.16, far above consensus of $0.90 and swinging from a $3.42 loss a year ago, driven by a rebound in ELEVIDYS gene therapy revenue as rescheduled infusions from Q4 2025 converted. The deep value report had flagged this 'catch-up' as a critical near-term checkpoint, and the strong quarter validates operational improvement in infusion throughput. However, revenue composition should be scrutinized for one-time collaboration milestones or inventory adjustments that may not recur. The company still faces unresolved FDA risks on both ELEVIDYS (further safety controls) and the PMO franchise after the ESSENCE trial failure. While the beat removes immediate liquidity concerns, the stock's valuation at ~1x revenue still prices in stable execution that regulatory overhangs threaten.

Implication

The strong quarter reduces near-term bankruptcy risk and improves cash runway, allowing investors to wait for mid-2026 catalyst of PMO conversion strategy and competitor data. However, asymmetric downside from FDA action remains, so position sizing should reflect the 30% bear case of $10 per share embedded in the deep value report.

Thesis delta

The Q1 2026 earnings beat significantly strengthens the near-term thesis by confirming ELEVIDYS can recover from Q4 disruption, but does not change the core regulatory uncertainty that drives the WAIT rating. The probability of base case ($22) increases modestly as liquidity improves, but bear case risks remain fully intact until FDA actions on PMO accelerated approvals become clear.