ACAD stock: 100 shares investment - how to invest better?

 March 17, 2021

The article is here. 

Here are highlights:

1. Nuplazid - 2 billion in incremental sales
2. ACAD stock - analyst average estimate stands at $44
3. 60% premium to the current stock price of $27. 
4. Nuplazid is already approved for hallucinations and delusions related to Parkinson's disease, while the current trial was for patients with hallucinations and delusions due to demontia-related psychosis. 

ACADIA Pharmaceuticals Stock Now Looks Oversold At $27 Levels

We believe that ACADIA Pharmaceuticals stock (NASDAQ: ACAD), a biopharmaceutical company focused on neuroscience drugs, is a good buying opportunity at the present time. ACAD stock trades near $27 currently and it is, in fact, down 43% from its pre-Covid high of around $47 in February 2020 – before the coronavirus pandemic hit the world. ACAD stock has had a volatile ride the past few months. It rallied from levels of under $35 in March 2020, when broader markets made the bottom, to levels north of $50 in late February 2021. However, over the recent weeks, the stock has plummeted to levels of $27 currently. The recent drop can be attributed to the U.S. FDA finding deficiencies in its application for its psychosis drug – Nuplazid. This is an important update given that Nuplazid sales with the new approval were touted to add as much as $2 billion in incremental sales. At the current price of $27, ACAD stock is actually trading below the levels seen in March 2020, while the broader S&P500 Index has rallied 77% over the same period.

However, the selling now appears to be overdone. After the recent development many analysts cut their price targets for ACAD stock, but still the average price estimate stands at $44, implying a potential 60% premium to the current stock price of $27. Furthermore, the company has stated that it will work with the U.S. FDA to resolve the discrepancies in its application. It should be noted that Nuplazid is already approved for hallucinations and delusions related to Parkinson’s disease, while the current trial was for patients with hallucinations and delusions due to dementia-related psychosis. Any hopes of approval in this space will be a positive for the company. In this note we focus on a comparative analysis of ACADIA Pharmaceuticals stock performance during the current financial crisis with that during the 2008 recession in our interactive dashboard.