Abbisko Cayman (SEHK:2256): Assessing Valuation Following Key Phase II Oncology Trial Milestone

Abbisko Cayman (SEHK:2256) just kicked off a Phase II trial for its oral PD-L1 inhibitor, ABSK043, combined with Glecirasib. The trial targets non-small cell lung cancer patients with the KRAS G12C mutation.

See our latest analysis for Abbisko Cayman.

Abbisko Cayman's launch of its latest clinical trial comes after a remarkable period for shareholders. The 1-year total shareholder return is an impressive 237.82%, while the stock has more than tripled year-to-date. The momentum has been especially pronounced in the past three months, with a 39.33% share price return, even though volatility picked up in recent weeks. This strong run reflects renewed confidence and growing interest in Abbisko's innovative drug pipeline.

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But with shares soaring and the latest breakthrough grabbing headlines, the real question is whether Abbisko Cayman is still undervalued at these levels or if the market has already priced in future growth. Is there more upside ahead, or has the opportunity passed?

Price-to-Earnings of 59.8x: Is it justified?

Abbisko Cayman is currently trading at a price-to-earnings (P/E) ratio of 59.8x, which is markedly higher than both its industry peers and assessed fair value multiples. At a last close price of HK$14.56, the stock appears richly valued by this metric.

The price-to-earnings ratio measures how much investors are willing to pay today for a dollar of the company’s earnings. For high-growth and biotech companies like Abbisko Cayman, elevated P/E ratios are common when expectations for future innovation and profitability are high. However, these multiples can quickly come under pressure if growth projections change.

Abbisko Cayman’s P/E multiple of 59.8x is significantly above the Asian Biotechs industry average of 43.7x, and even further above the estimated fair P/E ratio of 8.9x. This suggests that, while enthusiasm for the stock is strong, the market may be assigning a much higher value to Abbisko’s future prospects than comparable companies or regression-based fair value models would indicate. If sentiment shifts or future financials fall short, the stock could be vulnerable to a sharp re-rating back toward the lower fair ratio level.

Explore the SWS fair ratio for Abbisko Cayman

Result: Price-to-Earnings of 59.8x (OVERVALUED)

However, slowing revenue growth and negative net income trends present real risks. These factors could quickly challenge the market's upbeat outlook for Abbisko Cayman.

Find out about the key risks to this Abbisko Cayman narrative.

Another View: Discounted Cash Flow Suggests Undervaluation

While Abbisko Cayman appears overvalued based on its price-to-earnings ratio, our DCF model offers a different perspective. The SWS DCF model estimates that shares are trading about 37% below fair value, which may indicate potential upside. Could the real value be hidden beneath market sentiment?

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 Abbisko Cayman 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 836 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 Abbisko Cayman Narrative

If you see the story differently or want to run your own numbers, you can quickly build a customized view in just a few minutes. Do it your way.

A great starting point for your Abbisko Cayman 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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