On Friday, BofA Securities adjusted its outlook on Acadia Pharmaceuticals (NASDAQ:ACAD), reducing the price target on the company's shares to $22.00 from the previous $26.00, while keeping a Neutral rating on the stock. The adjustment follows Acadia's reported first-quarter 2024 revenue for Daybue, which slightly missed the company's guidance.
Acadia reported Daybue revenues of $75.9 million, narrowly missing the projected range of $76-82 million for the quarter. Management attributed the shortfall to a larger-than-anticipated number of patients discontinuing the therapy, which, for a time, surpassed the rate of new patient starts.
Still, the company indicated that this trend has stabilized, with positive net patient additions in the past six weeks, and does not foresee a negative trend in patient additions in the near term.
The company also noted that there has been no significant change in the discontinuation rate, with real-world persistence rates continuing to perform better than clinical trials by over 10 percentage points.
Management expects a persistence rate of over 50% at a steady state. Despite the recent positive trend in patient additions, BofA Securities expressed caution, pointing out the potential risk that long-term persistence rates might not meet the 50% threshold.
BofA Securities has adopted a conservative stance in its forecasts, now estimating Daybue sales for the full year 2024 to be $375 million, which is within the company's guided range of $370-420 million.
The firm also projects a peak risk-adjusted sales figure for Daybue of $716 million by the year 2032. The reiterated Neutral rating and adjusted price objective reflect BofA Securities' cautious position on the stock's future performance.
InvestingPro Insights
InvestingPro data sheds light on Acadia Pharmaceuticals' (NASDAQ:ACAD) financial health and market performance. With a market capitalization of $2.51 billion and a significant revenue growth of 56.43% in the last twelve months as of Q1 2024, the company demonstrates a strong top-line expansion. Despite a negative P/E ratio, which suggests the company is not currently profitable, Acadia shows promise with a gross profit margin of 49.05%, indicating a solid profit per dollar of sales.
From an investment standpoint, two InvestingPro Tips are particularly noteworthy. Firstly, Acadia holds more cash than debt on its balance sheet, which can be a sign of financial stability and flexibility. Secondly, the company is expected to see net income growth this year, which could signal a turnaround in profitability.
Still, it is important to note that four analysts have revised their earnings downwards for the upcoming period, indicating potential headwinds. For investors seeking a more comprehensive analysis, there are additional InvestingPro Tips available on the InvestingPro platform that may help in making a well-informed decision.
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