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A Look at Liquidia’s (LQDA) Valuation Following Strong YUTREPIA Launch and First Profitable Quarter

Simply Wall St · 11/07/2025 19:47

Liquidia (LQDA) caught the market’s attention after reporting third-quarter earnings that showed a major revenue jump and its first profitable quarter since launching YUTREPIA, its therapy for pulmonary hypertension.

See our latest analysis for Liquidia.

After a blockbuster quarter, Liquidia’s share price has soared, boasting a 25% gain in the past three months and a stunning year-to-date return of over 110%. Total shareholder return has been even more impressive, reaching 136% in the past year and above 500% over five years. The recent uptrend has been fueled by the strong commercial performance of YUTREPIA and renewed optimism from both analysts and investors, reflecting momentum that could shape the company's next chapter.

If Liquidia’s surge has you eyeing the broader sector, explore other innovators with our healthcare discovery tool using See the full list for free.

With Liquidia’s shares already soaring and analysts racing to raise their price targets, the big question is whether the stock remains undervalued or if enthusiastic investors have already priced in the next leg of growth.

Price-to-Sales of 32.2x: Is it justified?

Liquidia’s shares are trading at a sky-high price-to-sales (P/S) ratio of 32.2x, signaling a substantial premium compared to sector peers. With a last close of $25.60, the market is placing a hefty valuation on every dollar of revenue, far above the typical multiples seen in the pharmaceuticals industry.

The price-to-sales ratio compares a company’s market capitalization to its total sales, offering investors a quick gauge of how much they are paying for each dollar of revenue. This multiple is commonly used for high-growth or unprofitable companies, where earnings are not a reliable measure due to reinvestment or recent losses. For a business like Liquidia, it reflects investor expectations for rapid expansion or breakthrough profitability, but it may also indicate over-enthusiasm if fundamentals lag behind the excitement.

Compared to the US Pharmaceuticals industry average of 4x and a calculated “fair” P/S ratio of 14x, Liquidia’s premium appears excessive. Such a high multiple highlights divergent expectations about the company’s long-term potential. If fundamentals or growth disappoint, there is a risk the market could adjust to these lower benchmarks. There is a lot riding on Liquidia’s ability to deliver standout results that justify this aggressive valuation.

Explore the SWS fair ratio for Liquidia

Result: Price-to-Sales of 32.2x (OVERVALUED)

However, growth projections depend on continued product momentum, and any competitive or regulatory setbacks could quickly reverse recent optimism.

Find out about the key risks to this Liquidia narrative.

Another View: What Does the SWS DCF Model Say?

Looking from a discounted cash flow (DCF) perspective, Liquidia appears deeply undervalued, trading almost 81% below our estimate of its fair value. This presents a significant contrast with the steep premium seen in its high price-to-sales ratio. Which story will the market ultimately believe?

Look into how the SWS DCF model arrives at its fair value.

LQDA Discounted Cash Flow as at Nov 2025
LQDA Discounted Cash Flow as at Nov 2025

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Liquidia for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 861 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Liquidia Narrative

If you want to dive deeper or have your own take on Liquidia’s story, you can build your perspective in under three minutes with Do it your way.

A great starting point for your Liquidia research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.