Is CRISPR Therapeutics (CRSP) Attractively Priced After Recent Gene Editing Progress?

• If you are trying to work out whether CRISPR Therapeutics is priced attractively right now, it helps to first line up what the recent share moves and current valuation are really telling you.
• The stock last closed at US$58.19, with returns of 9.4% over the past week, 2.3% over the past month, 8.2% year to date, 38.8% over the past year and 20.6% over three years, while the five year return sits at a 69.4% decline.
• Recent attention on CRISPR Therapeutics has been shaped by news around its gene editing platform and the broader conversation about potential medical applications, which can influence how investors think about long term prospects and risk. At the same time, headlines around regulatory progress and competitive therapies in the gene editing space give extra context to the recent share price moves.
• On our simple valuation checklist, CRISPR Therapeutics scores 3 out of 6. You can see this broken down in more detail through our valuation score. Next, we look at the usual valuation tools before finishing with a more rounded way to judge what the current price might really mean.

CRISPR Therapeutics delivered 38.8% returns over the last year. See how this stacks up to the rest of the Biotechs industry.

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

A Discounted Cash Flow, or DCF, model takes estimates of a company’s future cash flows and discounts them back to today using a required rate of return, to arrive at an estimate of what the business might be worth right now.

For CRISPR Therapeutics, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is a loss of about US$306.7 million. Analyst and extrapolated projections in this model keep free cash flow in negative territory in the nearer years, such as an estimated loss of US$340.9 million in 2026, before moving into positive free cash flow further out, with US$305.1 million projected for 2030. Simply Wall St extends analyst inputs beyond the usual 5 year window to build a ten year cash flow path.

Discounting these projected cash flows results in an estimated intrinsic value of US$193.06 per share, compared with the recent share price of US$58.19. On this basis, the stock screens as about 69.9% undervalued using this DCF framework.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests CRISPR Therapeutics is undervalued by 69.9%. 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 CRISPR Therapeutics.

Approach 2: CRISPR Therapeutics Price vs Book

For companies that are still building toward consistent profitability, the price to book, or P/B, ratio can be a useful cross check because it compares what the market is paying to the accounting value of net assets rather than earnings that may be volatile or negative.

In general, investors tend to accept a higher P/B multiple when they expect stronger growth and see fewer risks, and a lower multiple when growth is uncertain or risks feel higher. That is why a single “normal” P/B ratio does not fit every stock.

CRISPR Therapeutics currently trades on a P/B of 2.89x. The broader Biotechs industry average P/B sits at 2.67x, while the peer group average provided here is 21.96x, which looks very high relative to both the company and the industry. Simply Wall St also uses a proprietary “Fair Ratio” for the preferred multiple. This measure is designed to reflect what might be reasonable given factors such as growth profile, risks, profit margins, industry and market cap. Because it blends all of these inputs, this Fair Ratio can be more informative than a straight comparison to peers or the sector. In this case, a Fair Ratio is not available, so this method does not give a clear under or overvaluation signal.

Result: ABOUT RIGHT

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

Approach 3: Upgrade Your Decision Making: Choose your CRISPR Therapeutics Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which Simply Wall St hosts on the Community page used by millions of investors.

A Narrative is your story about a company, where you connect what you believe about its business to hard numbers like future revenue, earnings, margins and the fair value you think is reasonable today.

In practice, a Narrative links three things: the company story, a financial forecast based on that story, and the fair value that falls out of those assumptions. You can then compare that fair value to the current share price to decide whether the stock looks attractively priced or not for you.

Because Narratives on Simply Wall St update when new information such as earnings or material news is added to the platform, your story and valuation stay current rather than frozen at the time you first wrote them.

With CRISPR Therapeutics, one investor might build a Narrative that supports a very high fair value based on strong long term adoption of gene editing therapies, while another might use more cautious assumptions and arrive at a much lower fair value, even though both are looking at the same company.

Do you think there's more to the story for CRISPR 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.

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