What Do argenx’s Growth Prospects and Recent Share Surge Mean for 2025 Investors?

If you are weighing your next move with argenx stock, you are definitely not alone. After all, this is a company that has rewarded patience. Just looking at the numbers, argenx has surged 41.0% in the past year and an incredible 195.9% over five years. Even in the shorter term, the momentum is hard to ignore, with a 1.0% gain over the past week and a solid 4.5% for the month. With returns like these, it is no wonder there is so much buzz around what is driving the growth, how much upside could remain, and whether now is the right moment to buy, hold, or take profits.

Part of the answer lies in shifting market sentiment about argenx’s innovative pipeline and the overall biotech sector, which has been recovering as investors rediscover their appetite for companies showing both resilience and long-term growth prospects. This change in tone adds fresh fuel to the debate about argenx’s valuation and whether the current price reflects all the good news already.

Speaking of valuation, argenx currently earns a value score of 3 out of a possible 6 checks for undervaluation. This means it meets half of the criteria analysts use to spot a bargain, but also fails to clear the rest. So, let us dive into each valuation approach and explore where argenx stands, and why the numbers on the surface might not tell the whole story. In fact, there is an even smarter way to look at valuation, and we will get to that by the end.

argenx delivered 41.0% returns over the last year. See how this stacks up to the rest of the Biotechs industry.

Approach 1: argenx Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates what a company is worth today by projecting its future cash flows and then discounting them back to their present value. For argenx, this model takes into account expected growth in Free Cash Flow (FCF), using both analyst estimates for the next five years and extrapolations beyond that.

Looking at the numbers, argenx's latest reported Free Cash Flow stands at $256.60 Million. Analysts anticipate strong annual growth, with FCF projected to reach approximately $3.82 Billion by the end of 2029. Ten-year forecasts, which combine both analyst input and forward estimates, continue this upward trajectory as the company grows its biotech pipeline and revenue base.

Based on the DCF model, argenx's intrinsic value is calculated at €1935.60 per share. Importantly, this suggests the stock is trading at a significant 64.6% discount to its fair value right now. In straightforward terms, DCF analysis sees argenx as considerably undervalued compared to what its future cash flows could be worth.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests argenx is undervalued by 64.6%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: argenx Price vs Earnings (P/E)

The Price-to-Earnings (P/E) ratio is a widely accepted metric for valuing profitable companies like argenx because it directly ties the company’s stock price to its earnings, offering a clear snapshot of how much investors are willing to pay for each euro of profit. For companies that have moved past the startup phase and are consistently generating profits, P/E is considered a reliable benchmark for comparing valuation.

What constitutes a “normal” or “fair” P/E ratio depends on several factors. Companies with higher earnings growth or lower perceived risk typically command higher P/E ratios, while those with uncertain prospects might have lower valuations. Thus, simply looking at the P/E ratio in isolation misses the full story.

argenx currently trades at a P/E ratio of 38.0x. This is higher than the biotech industry average of 30.2x, but well below the average for its listed peers, which sits at 75.2x. However, relying solely on these basic comparisons can be misleading, as they do not account for argenx’s unique combination of growth prospects, profitability, risk profile, and scale.

This is where the Simply Wall St "Fair Ratio" comes into play. The Fair Ratio, calculated at 35.6x for argenx, tailors the expected multiple for the company based on fundamentals like earnings growth, profit margins, market risks, the broader industry environment, and its market capitalization. By incorporating these layers of analysis, the Fair Ratio offers a more nuanced and company-specific benchmark than the one-size-fits-all industry or peer averages.

Comparing argenx’s actual P/E of 38.0x to its Fair Ratio of 35.6x, the difference is only 2.4x, suggesting the company is valued close to its fair level based on its fundamentals.

Result: ABOUT RIGHT

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Upgrade Your Decision Making: Choose your argenx Narrative

Earlier we mentioned that there is an even smarter way to make investment decisions than using traditional models alone. Let us introduce you to Narratives. A Narrative connects your perspective on argenx, a "story" about why you think the future will unfold a certain way, with clear financial estimates like future revenue, earnings, margins, and ultimately, a calculated fair value.

Instead of relying strictly on numbers, Narratives help you express your view of the company's prospects and risks in simple, structured language, then translate that story into a valuation forecast. With Simply Wall St’s Community page, millions of investors can easily create, update, and explore these Narratives, making it accessible for anyone to develop an investment thesis and see how it compares to the market price.

Narratives are dynamic. When news or earnings updates hit the market, these stories and their calculated fair values can be quickly revised, helping you decide whether to buy, hold, or sell based on the gap between fair value and current price. For example, the most optimistic Narrative on argenx expects its fair value to reach €885.0 a share thanks to robust pipeline progress and global expansion, while the most cautious Narrative prices it closer to €480.0 due to competitive threats and margin concerns.

Do you think there's more to the story for argenx? Create your own Narrative to let the Community know!

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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