On Tuesday, Mizuho (NYSE:MFG) Securities updated its financial model for shares of Axsome Therapeutics (NASDAQ:AXSM), resulting in an increased price target for the company's stock. The new target is set at $124, up from the previous $106, with an Outperform rating being maintained.
Currently trading at $99.08, the company has demonstrated impressive revenue growth of 51.47% over the last twelve months and maintains strong gross profit margins of 91.09%, according to InvestingPro data.
The adjustment comes after a post-third quarter evaluation and the inclusion of revenue projections for solriamfetol, marketed as Sunosi, for two additional potential indications: attention-deficit/hyperactivity disorder (ADHD) and major depressive disorder (MDD).
Phase 3 data readouts for each indication are anticipated in the first quarter of 2025. With a market capitalization of $4.8 billion, InvestingPro analysis suggests the stock is currently slightly undervalued, with additional growth potential from these pipeline developments.
The company's primary focus in the near term, however, is on the impending Phase 3 data announcement for its leading asset, AXS-05 (marketed as Auvelity for MDD), for the treatment of Alzheimer's disease-related agitation. This announcement is expected imminently within the current quarter.
The analyst from Mizuho expressed a strong positive outlook on AXS-05's prospects for Alzheimer's disease agitation, citing potential peak revenues exceeding $1 billion for this indication alone.
The analyst's optimism extends to the potential stock movement upon the release of positive Phase 3 data, suggesting a possible 20-30% upside for Axsome's shares. The anticipation of these data readouts has positioned Axsome Therapeutics as Mizuho's top pick, underpinned by the firm's confidence in the drug's revenue potential and the company's growth trajectory.
In other recent news, Axsome Therapeutics has reported record-breaking revenue for the third quarter, surpassing $100 million for the first time, marking an 81% year-over-year increase.
The revenue was primarily driven by sales of its major depressive disorder treatment, Auvelity, and its excessive daytime sleepiness medication, Sunosi. Despite these gains, Axsome reported a net loss of $64.6 million but maintains a robust cash reserve of $327.3 million.
H.C. Wainwright and RBC Capital Markets have reiterated a Buy rating and an Outperform rating, respectively, on Axsome shares. Axsome Therapeutics also reported positive results from the ENCORE Phase 3 trial for its drug candidate AXS-12, used in the treatment of narcolepsy with cataplexy, indicating a potential new treatment option for narcolepsy.
In addition, Axsome's plans include expanding its sales force for Auvelity and preparing for the potential launch of its migraine treatment, AXS-07. However, the FOCUS study for solriamfetol in ADHD has been delayed to the first quarter of 2025.
These are some of the recent developments that underline Axsome's commitment to growth through its robust late-stage pipeline and strategic plans for expanding its sales force and market access.
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