Acadia Pharmaceuticals (ACAD) shares rallied 6.8% in the last trading session to close at $25.32. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 9.7% gain over the past four weeks.
The sudden rise in the stock price was observed after the European Medicines Agency's Committee for Medicinal Products for Human Use adopted a positive opinion recommending Daybu (trofinetide) for EU approval to treat neurobehavioral symptoms of Rett syndrome following a successful re-examination. The positive opinion, supported by phase III LAVENDER data, reversed an earlier refusal and significantly improved the drug's regulatory outlook, with a final European Commission decision expected in the coming months. If approved, Daybu will become the first treatment for this indication in the EU.
This drugmaker is expected to post quarterly earnings of $0.06 per share in its upcoming report, which represents a year-over-year change of -62.5%. Revenues are expected to be $293.82 million, up 11.1% from the year-ago quarter.
While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For Acadia, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on ACAD going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Acadia is part of the Zacks Medical - Biomedical and Genetics industry. Rhythm Pharmaceuticals, Inc. (RYTM), another stock in the same industry, closed the last trading session 1.5% higher at $109.84. RYTM has returned 16.4% in the past month.
For Rhythm Pharmaceuticals, the consensus EPS estimate for the upcoming report has changed -1% over the past month to -$0.82. This represents a change of -9.3% from what the company reported a year ago. Rhythm Pharmaceuticals currently has a Zacks Rank of #4 (Sell).
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This article originally published on Zacks Investment Research (zacks.com).