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Keros Therapeutics (KROS): Valuation Check After Sharp Share Price Rebound and Ongoing Revenue Contraction Forecasts

Simply Wall St · 2d ago

Keros Therapeutics (KROS) has suddenly jumped about 30% over the past month, drawing fresh attention just as Wall Street is bracing for roughly 40% annual revenue contraction over the next few years.

See our latest analysis for Keros Therapeutics.

The latest burst of buying has pushed Keros Therapeutics’ share price to 21.69, with a 30 day share price return of roughly 34% and a 90 day gain near 38%. However, the 1 year total shareholder return is still deep in negative territory. This suggests that sentiment has improved quickly, but long term holders remain under water as the market reassesses future growth versus shrinking revenue expectations.

If Keros’s sharp rebound has you rethinking biotech exposure, it could be a good moment to explore other healthcare stocks that pair medical innovation with potentially more balanced risk and return.

With Keros trading just below analyst targets despite steeply negative long term returns and forecast revenue contraction, is this rebound an overlooked value opportunity, or a sign that markets are already pricing in any future recovery?

Price-to-Earnings of 6.6x: Is it justified?

On a price-to-earnings basis, Keros Therapeutics looks inexpensive at 6.6 times earnings compared with both the wider US market and its biotech peers.

The price-to-earnings multiple compares what investors pay today for each dollar of current earnings. This is a key yardstick in a sector where many companies are still loss making.

In Keros’s case, the company has only recently become profitable. The market is valuing those earnings at a steep discount to both the US market average of 18.7 times and the US biotech industry average of 19.1 times. Relative to an estimated fair price-to-earnings ratio of 9.5 times, the stock also trades well below the level that regression based models suggest the market could ultimately gravitate toward if sentiment continues to improve.

This combination of a low absolute multiple and a sizable gap to peers and the fair ratio indicates that investors may be pricing in a sharp deterioration in earnings power, even as the company’s profitability and high quality earnings profile point to a more complex story.

Explore the SWS fair ratio for Keros Therapeutics

Result: Price-to-Earnings of 6.6x (UNDERVALUED)

However, risks remain, including steep annual revenue and net income declines, as well as a long and uncertain path to commercializing its clinical stage pipeline.

Find out about the key risks to this Keros Therapeutics narrative.

Build Your Own Keros Therapeutics Narrative

If you see things differently or want to dig into the numbers yourself, you can build a custom view in just a few minutes: Do it your way.

A great starting point for your Keros Therapeutics research is our analysis highlighting 3 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.