On Tuesday, BofA Securities expressed a more optimistic outlook on Axsome Therapeutics (NASDAQ:AXSM) stock, elevating it from Neutral to Buy and increasing the price target to $106 from $95. The shift in sentiment is based on positive expectations for the company's key product, Auvelity, which is anticipated to perform well in various neuropsychiatry markets.
The analyst from BofA Securities highlighted that the upcoming second half of 2024 will be significant for Axsome, as pivotal data on Alzheimer's agitation (ADA) is expected. This data is seen as a critical event for the company, potentially reducing investment risk and confirming the drug's high revenue potential for its follow-on indications.
Additionally, the company's second-quarter performance indicated that Auvelity's approved Major Depressive Disorder (MDD) indication is beginning to experience growth. This is attributed to an expanded sales force and increased reimbursement coverage.
The analyst's revised sum-of-the-parts (SOTP) discounted cash flow (DCF)-based price objective of $106 per share reflects anticipated synergies in out-year selling, general, and administrative expenses (SG&A) between the two indications of Auvelity.
The upgraded rating and price target are founded on an attractive risk/reward balance, with a particular focus on updates to the company's pipeline expected in the latter half of 2024 and beyond. The company's main value driver, Auvelity, is poised for meaningful sales potential, which is central to BofA Securities' positive stance on Axsome Therapeutics' stock.
In other recent news, Axsome Therapeutics reported Q2 2024 revenues of $87.2 million, slightly beating analysts' projection of $85.3 million. However, the firm also reported a larger than expected net loss per share of $1.67 due to increased operating expenses.
H.C. Wainwright subsequently revised its price target for Axsome to $180 from $190, while maintaining a Buy rating. RBC Capital also adjusted its price target, lowering it to $130 from $131, but retained its Outperform rating.
Axsome Therapeutics has also seen recent success in the pharmaceutical industry, reporting a year-over-year revenue increase of approximately 160% in Q1 2024. The company successfully resolved a patent lawsuit with Unichem Laboratories, allowing for the launch of a generic version of its narcolepsy drug, Sunosi, in the U.S. in 2042.
Citi reaffirmed its Buy rating on Axsome with a steady price target of $125, while RBC Capital maintained its Outperform rating with a price target of $131. These ratings reflect the potential of Axsome's drug for Alzheimer's disease agitation, AXS-05, and the commercial prospects of its treatments in development. These are the recent developments in the company.
InvestingPro Insights
Following BofA Securities' optimistic outlook on Axsome Therapeutics, up-to-date metrics from InvestingPro further enrich the investment perspective. Axsome's market capitalization stands at approximately $3.98 billion, reflecting investor confidence in the company's growth potential. Despite the lack of profitability in the last twelve months, with a P/E ratio of -15.57, Axsome's impressive gross profit margin of 90.12% underscores its ability to manage costs effectively relative to revenue.
An InvestingPro Tip highlights that Axsome's liquid assets surpass its short-term obligations, indicating a solid financial position for handling near-term liabilities. Additionally, the company's strong return over the past five years suggests a robust track record, which may reassure investors looking for long-term growth. It's also worth noting that Axsome does not pay a dividend, which might be relevant for income-focused investors. For a more comprehensive analysis and additional tips, there are 8 more InvestingPro Tips available for Axsome Therapeutics at https://www.investing.com/pro/AXSM.
These insights, combined with the anticipated updates to Axsome's pipeline and the potential of Auvelity, offer investors a detailed lens through which to assess the company's prospects and investment potential.
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