FDA Nod, Analyst Bull Note Sends Acadia Pharmaceuticals Stock Soaring

ACAD stock rallied Thursday after the FDA commented on Nuplazid

by Emma Duncan

Published on Sep 21, 2018 at 9:53 AM
Updated on Jun 24, 2020 at 10:16 AM

Shares of San Diego-based drug concern ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) are continuing yesterday's surge, with a 6.7% advance to trade at $20.39 out of the gate. Just one day after the Food and Drug Administration (FDA) reiterated that the benefits outweigh the risks for Acadia's Parkinson's drug Nuplazid, Piper Jaffray this morning upgraded the stock to "overweight" from "neutral." The brokerage firm also hiked its price target on ACAD stock to $25 from $16, citing prescription growth prospects for Nuplazid.

Overall analyst sentiment is optimistic toward the drug stock, with six of eight covering firms sporting "strong buy" recommendations. Plus, ACAD's average 12-month price target of $31.56 represents a 54% premium to current trading levels.

Prior to this week, Acadia stock had been in a long-term downtrend since a late-February post-earnings bear gap. However, the shares are now trading in territory not charted since April, and are eyeing a second straight close atop their 160-day moving average -- a former ceiling of resistance. Despite this week's surge, ACAD remains down 36% year-to-date.

Digging deeper, options traders have also been extremely optimistic toward the pharma name, with data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) showing ACAD's 10-day call/put volume ratio at 20.37, ranking in the 96th annual percentile. This indicates that during the past two weeks, calls have been bought over puts at a faster-than-usual clip.

Interestingly, now may be the perfect time for near-term traders to jump onto ACADIA Pharmaceuticals options. This is per the stock's Schaeffer's Volatility Index (SVI) of 77%, which ranks in the 24th percentile of its annual range. This suggests that near-term options are still pricing in relatively low volatility expectations.


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