ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) — This biopharmaceutical company develops and commercializes small molecule drugs to address unmet needs in patients with neurological and central nervous system disorders.
Its pipeline includes Nuplazid, which could become the first drug approved in the United States for Parkinson’s disease-related psychosis. ACADIA reported positive Phase III trial results for the drug.
On Feb. 1, Cowen and Company analyst Ritu Baral said she liked ACAD stock based on Nuplazid, which has a billion-dollar-plus market and was given breakthrough status by the FDA.
Baral also noted that ACADIA has been the topic of numerous acquisition discussions. But keep in mind that ACAD stock is a speculative small cap and there has been no confirmation of any future acquisition discussions.
Although ACADIA reported a larger-than-expected loss in its most recent quarter of -$0.25 per shares versus an expected -$0.22, the company’s book value per share has increased from $0.45 in 2011 to $2.12 in 2013.
ACAD stock has been trading in a well-defined bull channel since July. Currently, it has solid support from its 50-day moving average at $32 and the bullish support line at $30. Its ultimate support is at the 200-day moving average, just below $26.
On Monday, the MACD indicator flashed a buy signal. And on Feb. 3, my proprietary indicator, the Collins-Bollinger Reversal (CBR), rendered a buy signal. A CBR buy was triggered on Oct. 15 at $25.11. ACAD stock subsequently rallied, which is evidence that this indicator has a valid history when applied to this stock.
Analysts’ mean target is near $40, with a high estimate of $50. Buy ACAD stock at the market for a trading target of $42, which would result in a 25% return. A stop-loss order should be entered at $30.
