ACAD
ACADIA Pharmaceuticals Inc.
$25.39
High-Growth Software
80%
Revenue × Terminal Margin DCF
Moderate
·
Conviction
Undervalued
Trading 37.2% below fair value
You pay
$25.39
Bear
$22.67
Fair
$40.41
Bull
$59.96
Bear
$22.67
-10.7%
11% rev growth, 21% terminal margin
Fair
$40.41
+59.2%
19% rev growth, 28% terminal margin
Bull
$59.96
+136.2%
24% rev growth, 32% terminal margin
Key Value Driver
Revenue growth (19%) × margin expansion to 28%
Terminal Value % of EV
62%
Implied Market Multiple
3.3x
Summary
Our base-case estimate uses a discounted cash flow model based on revenue growth and long-run free cash flow margins. We then blend that result with the average analyst price target of $34.57 from 37 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $40.41 per share.
Warnings
Our estimate assumes profit margins grow from 10% to 28% over 10 years. If that improvement stalls, the company is worth considerably less.
Gross margin of 92% means each dollar of revenue is highly profitable. As the company grows, overhead costs should shrink as a share of revenue, boosting overall profits.
Key Risks
- Current FCF misleads — the model values future margins, not today's cash
- SBC dilution is the hidden tax: 2-4% annual share growth compounds fast
- Revenue deceleration is inevitable — the question is when and how steep