What happened
Acadia Pharmaceuticals(NASDAQ: ACAD) is having a strong session Tuesday. Specifically, the drugmaker's shares were up by a healthy 6.7% on moderate volume at 10:02 a.m. ET.
What's sparking this rally? Ahead of the opening bell, JPMorgan analyst Tessa Romero upgraded the bank's outlook from neutral to overweight and raised its 12-month price target on the stock to $32 per share (up from $29 per share). This updated price target implies a noteworthy 47% upside potential relative to Acadia Pharmaceuticals' closing price on Monday.
So what
Despite an impressive 44.6% gain year-to-date, Acadia Pharmaceuticals stock has actually been struggling in recent weeks. Thanks to concerns about a patent dispute, rising bond yields, and a general aversion to risk by some investors, the biotech's shares have lost nearly a third of their value since hitting a 52-week high back in late July. As a result, this analyst upgrade probably couldn't have come at a better time.
Acadia Pharmaceuticals stock screens as an attractive, fundamentals-driven growth story, despite the patent and macro headwinds. Driving this point home, the drugmaker's stock is presently trading at only 3 times projected 2025 sales, a bargain-basement valuation for a company on track to post double-digit sales growth in both 2023 and 2024.
Now what
Is Acadia Pharmaceuticals stock still a buy? I think so. The company's newly approved Rett syndrome medication, Daybue, has blockbuster sales potential, and its Parkinson's disease psychosis drug, Nuplazid, is a proven revenue generator. Taken together, I think these two drugs will drive the company to consistent levels of profitability perhaps as soon as 2024. With its shares trading well below recent highs, I think now is a good time to start building a position in this mid-cap biotech.
10 stocks we like better than Acadia Pharmaceuticals
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Acadia Pharmaceuticals wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of October 9, 2023
JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. George Budwell has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.
