Akeso (SEHK:9926) Partners With MSK, Is The Discount To Fair Value Justified?

Akeso (SEHK:9926) has drawn fresh investor attention after partnering with Memorial Sloan Kettering Cancer Center on a Phase II study of cadonilimab based therapy for HER2 negative gastric and gastroesophageal junction adenocarcinoma.

See our latest analysis for Akeso.

Akeso's latest collaboration arrives after a mixed stretch in the stock, with the 7 day share price return up 12.62% and the 1 month share price return up 13.71%, but the year to date share price return down 12.18% and the 1 year total shareholder return down 33.27%. The 3 year total shareholder return is up more than 2x, which hints at momentum that has recently cooled.

If this kind of oncology progress has your attention, it could be a good moment to scan other healthcare focused AI opportunities using the 128 healthcare AI stocks

Akeso now trades at a sizeable discount to analyst targets, even after the recent rebound. This leaves a simple tension: is the market correctly pricing clinical and earnings risk, or has caution been taken too far?

Most Popular Narrative: 42.3% Undervalued

Akeso's most followed narrative places fair value at HK$172.32 a share, compared with the last close at HK$99.50, so the current gap is hard to ignore.

The analysts have a consensus price target of HK$172.32 for Akeso based on their expectations of its future earnings growth, profit margins and other risk factors.

However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of HK$225.88, and the most bearish reporting a price target of just HK$120.66.

Read the complete narrative.

Want to see what drives that valuation gap for Akeso? The narrative focuses on revenue expansion, rising margins and a rich future earnings multiple. Curious how those pieces fit together?

Result: Fair Value of HK$172.32 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the Akeso story still hinges on turning current operating and EBITDA losses into profits while managing its heavy dependence on a few key oncology products.

Find out about the key risks to this Akeso narrative.

Another View on Akeso's Valuation

The first narrative leans on analyst targets and implied earnings growth, but the SWS DCF model paints a different picture. On that framework, Akeso at HK$99.50 is trading below an estimated future cash flow value of HK$180.61, which also points to an undervalued stock. Does that strengthen your conviction, or does it raise questions about the underlying assumptions?

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

Next Steps

If this Akeso story has you leaning one way, remember that markets can change fast. Review the data yourself and weigh both risks and rewards, then check the 2 key rewards

Looking for more investment ideas beyond Akeso?

Before moving on, take a moment to line up a few other candidates so you are not relying on a single story or sector to carry your portfolio.

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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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