Is Pharma Mar (BME:PHM) Cheap On Its New UK Zepzelca Approval?
Pharma Mar (BME:PHM) moved back into focus after the UK regulator approved Zepzelca with atezolizumab as a first-line maintenance option for extensive-stage small cell lung cancer, extending an already wide territorial footprint.
Pharma Mar’s latest regulatory win comes after a mixed run in the market. The share price is €73.1, with a 30-day share price return down 10.14%, a 1-year total shareholder return down 21.99%, and a 3-year total shareholder return up 141.07%.
Scan Pharma Mar alongside a hand-picked 617 high quality undiscovered gems that are also trying to turn focused drug pipelines and fresh regulatory approvals into long-term shareholder value.
Bulls point to Pharma Mar’s oncology pipeline, fresh UK approval and recent revenue and net income growth, while bears focus on the share price pullback and volatility. Which story does the current valuation support?
Most Popular Narrative: 42% Undervalued
On the most followed storyline, Pharma Mar’s last close at €73.1 sits a long way below an implied fair value of €125. This valuation hinges on aggressive growth, higher margins and a low future earnings multiple.
While analyst consensus expects European approval of Zepzelca to boost revenues, this is likely understated. Current prelaunch and market access investments, combined with rapid compassionate use growth and pending guideline inclusion, are cited as factors that could set the stage for Zepzelca to capture a dominant share in a large, unmet European market, potentially driving revenue multiples above current forecasts following full market penetration.
See why 6 investors see Pharma Mar as 42% undervalued.
Result: Fair Value of €125 (UNDERVALUED)
Still, Pharma Mar’s heavy reliance on a small group of oncology drugs and rising competition around Zepzelca could quickly undermine the bullish valuation story.
Find out about the key risks to this Pharma Mar narrative.
Next Steps
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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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