Standing out among the Street's worst performers today is Ionis Pharmaceuticals, a pharmaceutical company whose shares slumped -3.1% to a price of $61.23, 11.17% below its average analyst target price of $68.92.
The average analyst rating for the stock is buy. IONS underperformed the S&P 500 index by -3.0% during today's afternoon session, but outpaced it by 38.3% over the last year with a return of 55.2%.
Ionis Pharmaceuticals, Inc., a commercial-stage biotechnology company, provides RNA-targeted medicines in the United States. 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.
Ionis Pharmaceuticals 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 $-3.74 and $-1.76. We can see that IONS has a forward P/E ratio of -16.4 and a trailing P/E ratio of -34.8. As of the third quarter of 2024, the average Price to Earnings (P/E) ratio for US health care companies is 22.94, and the S&P 500 has an average of 29.3. The P/E ratio consists in the stock's share price divided by its earnings per share (EPS), representing how much investors are willing to spend for each dollar of the company's earnings. Earnings are the company's revenues minus the cost of goods sold, overhead, and taxes.
When we subtract capital expenditures from operating cash flows, we are left with the company's free cash flow, which for Ionis Pharmaceuticals was $-546227000 as of its last annual report. Free cash flow represents the amount of money available for reinvestment in the business or for payments to equity investors in the form of a dividend. In IONS's case the cash flow outlook is weak. It's average cash flow over the last 4 years has been $-138883000.0 and they've been growing at an average rate of -17.2%.
Value investors often analyze stocks through the lens of its Price to Book (P/B) Ratio (its share price divided by its book value). The book value refers to the present value of the company if the company were to sell off all of its assets and pay all of its debts today - a number whose value may differ significantly depending on the accounting method. Ionis pharmaceuticals's P/B ratio is 15.43 -- in other words, the market value of the company exceeds its book value by a factor of more than 15, so the company's assets may be overvalued compared to the average P/B ratio of the Health Care sector, which stands at 3.19 as of the third quarter of 2024.
Since it has a negative P/E ratio., a higher than Average P/B Ratio, and negative cash flows with a downwards trend, Ionis Pharmaceuticals is likely overvalued at today's prices. The company has poor growth indicators because of a negative PEG ratio and with a negative growth trend. We hope you enjoyed this overview of IONS's fundamentals. Be sure to check the numbers for yourself, especially focusing on their trends over the last few years.
