Celebrations may be in order for ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. Investors have been pretty optimistic on ACADIA Pharmaceuticals too, with the stock up 32% to US$32.18 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
Following the upgrade, the latest consensus from ACADIA Pharmaceuticals' 18 analysts is for revenues of US$639m in 2023, which would reflect a sizeable 23% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 67% to US$0.29. Yet before this consensus update, the analysts had been forecasting revenues of US$557m and losses of US$0.50 per share in 2023. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.
The consensus price target rose 21% to US$29.69, with the analysts encouraged by the higher revenue and lower forecast losses for this year. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on ACADIA Pharmaceuticals, with the most bullish analyst valuing it at US$39.00 and the most bearish at US$12.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting ACADIA Pharmaceuticals' growth to accelerate, with the forecast 32% annualised growth to the end of 2023 ranking favourably alongside historical growth of 21% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 16% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that ACADIA Pharmaceuticals is expected to grow much faster than its industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting ACADIA Pharmaceuticals is moving incrementally towards profitability. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, ACADIA Pharmaceuticals could be worth investigating further.
Better yet, ACADIA Pharmaceuticals is expected to break-even soon - within the next few years - according to analyst forecasts, which would be a momentous event for shareholders. For more information, you can click through to our free platform to learn more about these forecasts.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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