Acadia's Valuation Looks Pretty Attractive Right Now: Bank Of America Upgrades To Buy

ACADIA Pharmaceuticals Inc. ACAD reported its Q3 2016 results, with earnings below expectations, driven by higher than anticipated opex.

Tazeen Ahmad of Bank of America upgraded the rating on the company from Neutral to Buy, while lowering the price target from $39 to $35.

The analyst believes there is significant upside potential from the current stock valuation.

Q3 Results

ACADIA Pharma reported Nuplazid sales of $5.3 million, ahead of the estimates and the consensus, with lower than expected EPS of $(0.61).

The company stated that the launch metrics for Nuplazid were in line with the pre-launch expectations.

“While not stating the exact number of patients on commercial therapy CEO Steve Davis noted no impact from inventory or large bulk orders,” Ahmad stated.

ACADIA Pharma also reported gross to net in the mid-20 percent in Q3, while management commented that the results from the Alzheimer’s Disease Psychosis trials for Nuplazid might not need to be statistically significant to warrant advancement.

Nuplazid Sales

Ahmad estimates peak Nuplazid sales for Parkinson’s Disease Psychosis of $1.4 billion, lowered from the earlier estimate of $1.6 billion, although sales growth is still expected to see robust acceleration.

For FY 2016, Nuplazid sales are estimated at $15 million, growing to nearly $180 million in 2018.

“Nuplazid, while having good coverage in Medicare, still needs to gain traction with commercial formularies,” the analyst stated.