LUCID CAPITAL MARKETS Initiates Coverage of Adagene Inc. - Depositary Receipt (ADAG) with Buy Recommendation

LUCID CAPITAL MARKETS initiated coverage on Adagene Inc. (ADAG) with a Buy rating on September 18, 2025, setting an average one-year price target of $9.84/share, which implies a 377.44% upside from its $2.06 closing price, supported by a projected annual revenue increase of 206,955.93% to $214MM. While the number of institutional holders increased by 15% and their average portfolio weight in ADAG rose by 16.03%, total institutional share ownership paradoxically decreased by 20.15% over the last quarter, indicating a divergent sentiment among institutional investors despite the bullish analyst initiation and revenue outlook.

Analysis

LUCID CAPITAL MARKETS has initiated coverage on Adagene Inc. (ADAG) with a 'Buy' rating, projecting a significant 377.44% upside with an average one-year price target of $9.84 against a recent closing price of $2.06. This bullish outlook is primarily underpinned by a forecast for explosive annual revenue growth of 206,955.93% to $214 million. However, this top-line optimism is contrasted by a projected negative non-GAAP EPS of -$1.87, indicating that profitability remains a future objective. Institutional sentiment presents a complex picture; while the number of funds holding ADAG increased by 15% and their average portfolio weight grew by 16.03%, the total shares owned by institutions paradoxically decreased by a substantial 20.15% in the last quarter. This divergence suggests that while new, smaller positions are being initiated (e.g., Kamunting Street Capital Management), some larger holders may be trimming their stakes, a notable counter-signal to the analyst's positive initiation. The wide dispersion in analyst price targets, from a low of $3.54 to a high of $22.12, further underscores the high degree of uncertainty and potential volatility associated with the stock's future performance.

Key Decisions for Investors

• Investors with a high risk tolerance might view the new 'Buy' rating and substantial price target as a catalyst for a speculative growth play, driven by the extraordinary revenue forecast.
• It is critical to investigate the reasons behind the 20.15% decrease in total institutional shares, as this divergence from the growing number of fund holders could signal that larger, more informed investors are reducing exposure.
• Given the projected negative EPS of -$1.87, any investment thesis must be accompanied by a thorough analysis of the company's cash burn rate and a clear understanding of its path to profitability.
• The extremely wide analyst price target range ($3.54 to $22.12) highlights significant execution risk and potential share price volatility, warranting careful position sizing and risk management.