Is Adamas Stock Still Worth Buying After Its 77% Rally? This 5-Star Analyst Says ‘Yes’
It has been hard going for long term investors of Adamas Pharmaceuticals (ADMS). The stock has been down trending since the start of 2018. However, at long last investors had something to cheer about. The Emeryville, California based micro-cap added a blistering 77% to its share price in the past 3 trading days.
Adamas’ surge came off the back of a Q2 earnings beat. Adamas generated revenue of $18.79 million, almost all of which was from Gocovri, the company’s treatment for dyskinesia (the uncontrolled movements) in Parkinson patients who are taking a levodopa-based therapy.
Gocovri brought in revenue of $18 million, up 24% quarter-over-quarter and up by 41% year-over-year, beating the Street’s $15.3 million estimate. Adamas also posted a beat on the bottom line, with Q2 GAAP EPS of -$0.37 ahead of consensus by $0.24.
Gocovri was also responsible for the quarter’s other highlight. Along with the treatment’s excellent performance, the FDA accepted Adamas’ sNDA (supplemental new drug application) to extend Gocovri’s label to treat OFF episodes – the times when levodopa does not working perfectly - in Parkinson's disease patients receiving the therapy. A PDUFA date is set for February 1, 2021.
William Blair analyst Tim Lugo argues that should the FDA approve the label extension, “the full range of benefits provided by Gocovri,” will become apparent. Overall, Lugo maintains Adamas’ value is currently going unnoticed by the market.
The 5-star analyst said, “We believe the initiatives undertaken by new management who joined the company in 2019, such as the sNDA for Gocovri’s label revision and Gocovri Cares Coordinator Program, are starting to show effect. The cash balance of $103.4 million at the end of the second quarter is sufficient to get the company into 2021 and should provide sufficient runway for continued execution of Gocovri commercialization. With an enterprise value of just over $90 million and Gocovri to bring in an estimated $68.9 million in sales during the year, we believe there remains a deep value disconnect for shares.”
Accordingly, Lugo rates ADMS shares an Outperform (i.e. Buy). Lugo has no fixed price target in mind. (To watch Lugo’s track record, click here)
The rest of the Street, though, sees plenty of upside in the cards. With an average price target of $8.76, the analysts expect shares to surge by an additional 90% over the next 12 months. The optimistic target is extended to Adamas’ consensus rating: A Strong Buy - based on 3 Buys and 1 Hold. (See Adamas stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
