Pharmaceutical company BridgeBio Pharma is standing out today, surging to $34.23 and marking a 8.4% change. In comparison the S&P 500 moved only 0.0%. BBIO is -30.94% below its average analyst target price of $49.56, which implies there is more upside for the stock.
As such, the average analyst rates it at buy. Over the last year, BridgeBio Pharma has underperfomed the S&P 500 by 37.3%, moving -15.2%.
BridgeBio Pharma, Inc., a commercial-stage biopharmaceutical company, discovers, creates, tests, and delivers transformative medicines to treat patients who suffer from genetic diseases and cancers. The company is categorized within the healthcare sector. The catalysts that drive valuations in this sector are complex. From demographics, regulations, scientific breakthroughs, to the emergence of new diseases, healthcare companies see their prices swing on the basis of a variety of factors.
BridgeBio Pharma does not publish either its forward or trailing P/E ratios because their values are negative -- meaning that each share of stock represents a net earnings loss. But we can calculate these P/E ratios anyways using the stocks forward and trailing (EPS) values of $-3.06 and $-2.42. We can see that BBIO has a forward P/E ratio of -11.2 and a trailing P/E ratio of -14.1.
The P/E ratio is the company's share price divided by its earnings per share. In other words, it represents how much investors are willing to spend for each dollar of the company's earnings (revenues minus the cost of goods sold, taxes, and overhead). As of the third quarter of 2024, the health care sector has an average P/E ratio of 26.07, and the average for the S&P 500 is 29.3.
Another key to assessing a company's health is to look at its free cash flow, which is calculated on the basis of its total cash flow from operating activities minus its capital expenditures. Capital expenditures are the costs of maintaining fixed assets such as land, buildings, and equipment. From BridgeBio Pharma's last four annual reports, we are able to obtain the following rundown of its free cash flow:
| Date Reported | Cash Flow from Operations ($ k) | Capital expenditures ($ k) | Free Cash Flow ($ k) | YoY Growth (%) |
|---|---|---|---|---|
| 2023 | -527,720 | 1,306 | -529,026 | -24.68 |
| 2022 | -419,494 | 4,821 | -424,315 | 16.99 |
| 2021 | -497,934 | 13,246 | -511,180 | -25.53 |
| 2020 | -399,714 | 7,518 | -407,232 | -58.94 |
| 2019 | -253,587 | 2,638 | -256,225 | -443.37 |
| 2018 | -46,414 | 741 | -47,155 |
- Average free cash flow: $-362522166.7
- Average free cash flown growth rate: -62.2 %
- Coefficient of variability (the lower the better): 0.0 %
If it weren't negative, the free cash flow would represent the amount of money available for reinvestment in the business, or for payments to equity investors in the form of a dividend. While a negative cash flow for one or two quarters is not a sign of financial troubles for BBIO, a long term trend of negative or highly erratic cash flow levels may indicate a struggling business or a mismanaged company.
With a negative P/E ratio., no published P/B ratio, and negative cash flows with a downwards trend, we can conclude that BridgeBio Pharma is probably overvalued at current prices. The stock presents poor growth indicators because of its with a negative growth trend, and a negative PEG ratio.
