Overview
UBS has increased its price objective on Alkermes Inc. to $47.00 from $46.00 while maintaining a Buy recommendation on the biopharmaceutical company. The revised target implies about a 40% upside relative to Alkermes' most recent share price of $33.52. The change follows an updated pro-forma financial model that incorporates Alkermes' planned acquisition of Avadel Pharmaceuticals and reflects the company's strong net cash position, with more cash on the balance sheet than outstanding debt.
Valuation and model adjustments
The bank adjusted its long-term valuation methodology, moving to a 4.5x EV/2032E sales multiple from a prior 5.5x EV/2030E sales multiple. UBS said the lower multiple reflects Avadel's relatively lower multiple and the expectation that most of Alkermes' legacy commercial products will lose exclusivity after 2032. UBS' model still forecasts meaningful upside for the combined business based on projected EBITDA expansion and expected synergies.
Acquisition terms and financing
The pro-forma work assumes Alkermes closes its takeover of Avadel in the first quarter of 2026. Alkermes raised its offer for Avadel to $21.00 per share in cash from an earlier $18.50 per share proposal. The revised offer includes a contingent value right worth up to $1.50 per share, taking the total potential transaction value to roughly $2.37 billion. UBS incorporated certain operational expense synergies from the proposed deal into its forecasts, and Alkermes has secured a $1.5 billion loan facility to support the transaction.
Clinical and regulatory developments
UBS highlighted two upcoming clinical catalysts that could influence Alkermes' performance in 2026: trial readouts for Lumryz and results from the alixorexton intranasal (IH) study. In addition, alixorexton has received Breakthrough Therapy designation from the U.S. Food and Drug Administration for the treatment of narcolepsy type 1, a regulatory status granted on the basis of phase 1 and phase 2 data, including findings from the Vibrance-1 study. UBS sees these developments as potential contributors to EBITDA growth and franchise strengthening in Sleep.
Market positioning and metrics
UBS notes Alkermes' current EBITDA at $388.71 million and a market capitalization of about $5.53 billion. The bank believes that Alkermes is positioned to outperform next year if the Avadel deal closes and the combined business meets or exceeds fiscal 2026 guidance. UBS expects that guidance for the integrated business could prompt a re-rating of the stock, assuming the operational synergies it models materialize as planned.
Other market reactions
Market commentary around Alkermes has included a reiteration from H.C. Wainwright, which maintained a Neutral rating and a $46.00 price target following Alkermes' revised acquisition offer. The bid increase came after Avadel received an unsolicited proposal from H. Lundbeck A/S, a development that preceded Alkermes' enhanced terms.
Note on limitations - This article confines itself to the facts reported regarding UBS' updated target and the transaction-related and clinical details described above. Where modelling assumptions are referenced, they reflect UBS' stated inputs as summarized in the bank's updated pro-forma analysis.