Analysts Think Axsome Therapeutics Stock Could Soar 35% Over the Next 12 Months. Is the Stock a No-Brainer Buy?

Axsome Therapeutics (NASDAQ: AXSM) has been a great stock to own over the past five years. The company's shares have climbed by about 660%. However, Wall Street remains excited about the company's prospects. Axsome Therapeutics' average price target (according to Yahoo! Finance) is $285.42, implying a 35% upside from its current level. Could the stock really gain that much over the next 12 months?

Multiple catalysts on the horizon

Axsome Therapeutics is posting solid financial results. In the second quarter, the company's revenue increased by 46% year over year to $218.4 million. The biotech's most important growth driver by far is Auvelity, a depression medicine. Second-quarter Auvelity sales came in at $180.3 million, 51% higher than the year-ago period. Auvelity recently earned a label expansion in Alzheimer's disease (AD) agitation, an indication that adds millions of patients in an underserved and growing therapeutic area to its addressable market.

Axsome Therapeutics also markets Sunosi, a medicine for daytime sleepiness due to narcolepsy, and Symbravo, a migraine treatment. Further, over the next year, the company should make meaningful clinical and regulatory progress. Axsome Therapeutics is running a Phase 3 clinical trial of AXS-14 for fibromyalgia and is preparing Phase 3 studies for AXS-20 in schizophrenia. In addition, the drugmaker could earn approval for AXS-12 to treat narcolepsy by May of next year.

If Axsome Therapeutics can achieve significant clinical trial wins and launch a brand-new product over the next year, the stock could climb meaningfully. Under a bullish scenario, a 35% gain over the next 12 months is not out of the question.

The more important question

That said, it's always difficult to predict which way any stock will move in the near term. Even with Axsome Therapeutics' upcoming catalysts in mind, broader equity market challenges or company-specific headwinds -- such as regulatory setbacks -- could sink the stock. But what do Axsome Therapeutics' medium-term prospects look like? The biotech has an attractive late-stage pipeline, with several products that could either post Phase 3 clinical trial results or earn approval within the next three years.

While a single setback could significantly impact Axsome Therapeutics' performance over the next 12 months, the picture changes once we expand our timeline five years into the future. Axsome Therapeutics' pipeline is deep enough to handle some clinical trial failures and still perform well over this period. In fact, since 2021, the company has faced a few headwinds and has still crushed broader equities.

Even assuming, for the sake of argument, that half of its ongoing late-stage clinical trials succeed, Axsome Therapeutics could have at least a couple of new products (or label expansions) by the end of the decade, and we haven't even considered the company's Phase 2 clinical programs, which should also make progress. Meanwhile, Axsome Therapeutics' revenue should continue to grow at a good clip as it makes progress in large markets such as AD agitation.

So, my view is that Axsome Therapeutics is well-positioned to deliver competitive returns through 2031, even if it falls short of the Street's price target within a year.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Axsome Therapeutics. The Motley Fool has a disclosure policy.