ACAD Rises on Acquisition, Initiated Coverage

Acadia Pharmaceuticals Inc (NASDAQ:ACAD) is up 1.15% to trade at $38.40 at last check, after announcing its acquisition of CerSci Therapeutics. The deal will further Acadia's non-opioid pain therapies, giving more potential for non-addictive treatments and reduced side effects. Steve Davis, Acadia's Chief Executive Officer, stated that “there is an urgent need for new approaches to treat pain without causing addiction.” Ahead of the news, Raymond James initiated coverage with an "outperform" rating and price target of $65.

ACAD has been sliding on the charts since its late-July bear gap after a failed study. Now contending with steep pressure at its descending 10-day moving average, the stock has found support at the $38 region. Year-to-date, the pharmaceutical stock is down 11.2%. Today's positive price action also comes amid ACAD sitting in "oversold" territory, based on its 14-day Relative Strength Index (RSI) of 29, meaning a short-term bounce is in the cards. 

Coming into today, analysts appear quite confident on ACAD. Thirteen out of the 14 analysts in coverage sport a "buy" or better rating on the shares, with one at a lukewarm "hold." Meanwhile, the 12-month consensus price target of $58.88 is a 55% premium to last night's close. A short squeeze could be in the works as well, with the 9.89 shares sold short accounting for 6.86% of the stock's available float, or nearly six days to buy back at Acadia stock's average pace of trading. 

That being said, options could be a good way to go when weighing in on ACAD. The equity's Schaeffer's Volatility Index (SVI) of 52% stands higher than just 6% of all other readings from the past 12 months, implying near-term option traders are pricing in relatively low volatility expectations.