Analyst Targets 75% Upside for Troubled Drug Stock

Analyst "buy" ratings and short covering have failed to lift ADMS stock

Nov 13, 2018 at 2:59 PM
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Leerink resumed coverage on Adamas Pharmaceuticals Inc (NASDAQ:ADMS) with an "outperform" rating and $20 price target -- a nearly 75% premium to last night's close. After surging as much as 6.9% in early trading, ADMS stock was last seen down 1.2% at $11.32.

More broadly speaking, it's been a rough stretch for ADMS shares, which have shed 61% year-over-year. Plus, the drug stock suffered a nearly 30% post-earnings bear gap on Nov. 2, and bottomed at a record low of $10.58 on Nov. 5.

adms stock daily chart nov 13

Short sellers have been cashing in on the stock's weakness, too. After topping out at an all-time peak of 8.45 million shares on June 15, short interest on Adamas Pharmaceuticals is down 13%. Nevertheless, the 7.35 million shares still dedicated to these bearish bets account for 28.4% of the equity's available float, or 13.3 times the average daily pace of trading.

And despite ADMS stock's dismal performance, most analysts echo Leerink's upbeat outlook. While six of the eight covering brokerages maintain a "strong buy" rating -- with note one "sell" on the books -- the average 12-month price target stands all the way up at $41.60. This puts the stock at risk for downgrades and/or price-target cuts, which could exacerbate tailwinds.

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