Reassessing Liquidia (LQDA) Valuation After Yutrepia’s Strong Launch and Growing Institutional Confidence

Liquidia (LQDA) is back in the spotlight after Yutrepia’s early commercial rollout cleared some high expectations, with prescription demand running ahead of forecasts and institutional investors leaning in with long dated call option positions.

See our latest analysis for Liquidia.

That excitement is bleeding into the chart too, with Liquidia’s 1 month share price return of 19.04% and 3 month share price return of 24.69% adding to a powerful year to date share price return of 175.87%. At the same time, the 1 year total shareholder return of 205.68% and 3 year total shareholder return of 461.95% point to momentum that has been building rather than fading.

If Yutrepia’s early traction has you rethinking what growth can look like in healthcare, it might be worth exploring other healthcare stocks that could be gearing up for their own inflection points.

With the stock already up multiples and trading at a double digit discount to analyst targets, investors now face a key question: Is Liquidia still underappreciated by the market, or has Yutrepia’s future growth already been fully priced in?

Price to Sales of 42x: Is it justified?

On a price to sales basis, Liquidia’s valuation looks stretched, with the stock trading at 42 times revenue at a last close of $33.38 and far above many peers.

The price to sales multiple compares a company’s market value to its revenue, which is a common way to frame early stage or loss making biopharma names where earnings are not yet meaningful. For Liquidia, investors appear to be paying a premium today for the potential future cash flows from Yutrepia and the broader treprostinil franchise rather than current revenue alone.

However, that 42 times multiple towers over both the US Pharmaceuticals industry average of 4.2 times and the 9.3 times peer group average. This suggests the market is assigning Liquidia a growth and execution profile that is far more ambitious than typical sector expectations. Even relative to an estimated fair price to sales ratio of 16.1 times, the current valuation implies a rich premium that could compress if revenue growth or profitability milestones fall short of what is currently being priced in.

Explore the SWS fair ratio for Liquidia

Result: Price-to-Sales of 42x (OVERVALUED)

However, investors should watch for slower than expected Yutrepia uptake or regulatory setbacks, either of which could quickly cool sentiment and compress Liquidia’s premium multiple.

Find out about the key risks to this Liquidia narrative.

Another View: Our DCF Says Cheap

While a 42 times sales multiple suggests significant optimism, our DCF model paints a very different picture. On that basis, Liquidia appears deeply undervalued, with our fair value estimate at $196.66 versus a current price of $33.38, an 83% gap the market has not closed yet.

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

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 908 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 your perspective differs or you would rather dig into the numbers yourself, you can build a personalized view in just a few minutes: 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.

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