Is It Too Late To Consider Halozyme Therapeutics (HALO) After A 43% One-Year Surge?

• If you are asking whether Halozyme Therapeutics at around US$73.13 is still priced attractively, you are exactly who this breakdown is for.
• The stock has logged returns of 8.0% over the last week, 15.5% over the last month, and 42.9% over the past year, which naturally raises questions about growth potential and how much risk is now priced in.
• Recent coverage has focused on Halozyme Therapeutics as a US biotechnology company listed on the NASDAQ, with evergreen investor interest in how its business model and partnerships translate into long term value. This context helps frame the recent share price moves as part of an ongoing story rather than a short term trading spike.
• On our framework of 6 valuation checks, Halozyme Therapeutics scores 5 out of 6. This sets up a closer look at how different valuation methods line up today and hints at an even richer way to think about value that we will come to at the end of this article.

Halozyme Therapeutics delivered 42.9% returns over the last year. See how this stacks up to the rest of the Biotechs industry.

Approach 1: Halozyme Therapeutics Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future cash flows and then discounting those back to today, using the idea that cash received in the future is worth less than cash received now.

For Halozyme Therapeutics, the model uses a 2 Stage Free Cash Flow to Equity approach, starting from last twelve month free cash flow of about $596.8 million. Analysts provide near term estimates, such as projected free cash flow of $437 million for 2024, and Simply Wall St then extrapolates further out, with annual cash flows reaching around $1.3b in 2035, all expressed in $ and discounted back to today.

Putting these projections together, the DCF model arrives at an estimated intrinsic value of about $200.64 per share. Compared with a current share price around $73.13, this implies the stock is about 63.6% undervalued on this specific cash flow view.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Halozyme Therapeutics is undervalued by 63.6%. Track this in your watchlist or portfolio, or discover 877 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Halozyme Therapeutics.

Approach 2: Halozyme Therapeutics Price vs Earnings

For a profitable company like Halozyme Therapeutics, the P/E ratio is a useful shorthand because it links what you pay today directly to the earnings the business is already generating. It lets you quickly see how many dollars investors are currently willing to pay for each dollar of earnings.

What counts as a “normal” P/E depends on what the market expects for future earnings growth and how much risk investors see in the business. Higher expected growth or lower perceived risk can justify a higher P/E, while lower growth or higher risk usually calls for a lower multiple.

Halozyme’s current P/E is about 14.4x, compared with an average of 19.9x for peers and 21.5x for the broader Biotechs industry. Simply Wall St’s “Fair Ratio” for Halozyme is 19.9x, which is a proprietary estimate of what the P/E could be given factors like its earnings growth profile, profit margins, industry, market cap and company specific risks.

This Fair Ratio is more tailored than a simple peer or industry comparison because it adjusts for Halozyme’s own characteristics rather than assuming it should trade exactly like the average biotech stock. With the current P/E of 14.4x sitting below the Fair Ratio of 19.9x, this multiple-based view indicates that the shares are undervalued on an earnings basis.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1448 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Halozyme Therapeutics Narrative

Earlier we mentioned that there is an even better way to understand valuation, so Narratives on Simply Wall St let you turn your view of Halozyme Therapeutics into a clear story that connects its ENHANZE driven opportunity, risks like patent litigation and reimbursement pressure, and your assumptions for future revenue, earnings and margins into a forecast and fair value. You can compare that fair value with the current price to decide whether you see Halozyme as closer to a US$51 or US$91 story, and then keep that view automatically updated as new earnings, news and guidance on things like 2025 revenue of US$1.3b to US$1.375b and royalty revenue of US$850m to US$880m arrive, all within an easy to use Community page that millions of investors access.

Do you think there's more to the story for Halozyme Therapeutics? Head over to our Community to see what others are saying!

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com