On Thursday, Baird adjusted its outlook on Acadia Pharmaceuticals (NASDAQ:ACAD), reducing the price target to $28 from the previous $31 while maintaining an Outperform rating on the stock. The adjustment comes in response to the reported weaker-than-expected revenue from Acadia's Daybue in the first quarter of 2024, which the firm attributes to seasonal factors that have since been resolved.
The Baird analyst noted that despite the initial dip in revenue, Daybue has experienced a rise in net patient additions over the past six weeks. Additionally, the medication's persistency rates are holding strong, reportedly around 10 percentage points higher than what was observed during clinical trials. This indicates a solid uptake and continued use among patients.
Acadia's other drug, Nuplazid, was also highlighted for its significant contribution to the company's finances, generating over $300 million in annual cash flow. This strong performance underpins the company's financial health and supports ongoing operations and research endeavors.
The analyst's outlook remains positive, emphasizing that Acadia Pharmaceuticals is still considered undervalued. This perspective takes into account not only the current financials but also the potential of its pipeline, which includes ACP-204. ACP-204 is in mid-to-late stage development for treating Alzheimer's disease psychosis, representing a key asset in Acadia's future growth prospects.
InvestingPro Insights
In light of Baird's recent adjustments to Acadia Pharmaceuticals' price target, it is noteworthy to consider the financial health and market performance of the company through the lens of InvestingPro data. Acadia holds a market cap of approximately $2.83 billion, and while it is trading near its 52-week low, which may signal a potential buying opportunity, it is important to note that the company is not profitable over the last twelve months. However, analysts are predicting profitability this year, which could indicate a turning point for the firm.
InvestingPro Tips suggest that Acadia's financial position is bolstered by having more cash than debt on its balance sheet, and its liquid assets exceed short-term obligations, providing a degree of financial flexibility. Moreover, with a revenue growth of 40.45% in the last twelve months as of Q4 2023, the company showcases a strong capacity for increasing its earnings. These metrics suggest a solid financial foundation that could support the company's recovery and growth as anticipated by Baird's analysis.
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