ACAD
ACADIA Pharmaceuticals Inc.
$21.10
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Undervalued
Trading 46.9% below fair value
You pay
$21.10
Bear
$22.55
Fair
$39.77
Bull
$58.57
Bear
$22.55
+6.9%
11% rev growth, 21% terminal margin
Fair
$39.77
+88.5%
18% rev growth, 28% terminal margin
Bull
$58.57
+177.6%
23% rev growth, 32% terminal margin
Key Value Driver
Revenue growth (18%) × margin expansion to 28%
Terminal Value % of EV
61%
Implied Market Multiple
2.7x
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 $34.78 from 37 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $39.77 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