Assessing Kyowa Kirin After FDA Approval for Parkinson’s Treatment and Recent Share Recovery

Trying to decide what to do with Kyowa Kirin stock? You are not alone. With a track record marked by both highs and lows, Kyowa Kirin keeps investors guessing about what comes next. In the last week, shares inched up 3.2%, suggesting a touch of renewed optimism after a tough stretch. However, zoom out to the past month or year, and the story looks a bit different: the stock is down 9.7% over 30 days and has lost 7% in the past year. Longer-term returns tell a similar tale, with a 25% dip over three years and a nearly 5% decline for the five-year period. Market sentiment has been influenced by shifting expectations across the pharmaceuticals sector, as well as ongoing debates about the company’s growth potential and perceived risk.

So where does value come into play in this complex picture? When we break down Kyowa Kirin’s numbers, its valuation score stands at 2, meaning it passes just 2 out of 6 key undervaluation checks. That hints at some areas where the stock might offer hidden value, but also flags several metrics investors should watch closely.

Next, let’s dig deeper into what those six valuation checks are and how Kyowa Kirin stacks up. And if the usual valuation formulas have left you with more questions than answers, do not worry. We will wrap up with an even clearer approach to understanding whether Kyowa Kirin is truly worth your investment.

Kyowa Kirin scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Kyowa Kirin Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a classic tool for finding a company's fair value. It works by projecting the company's future cash flows and then discounting them back to today, using a reasonable rate, to get an estimate of what those cash flows are worth right now.

For Kyowa Kirin, analysts estimate that the latest twelve months of Free Cash Flow (FCF) totaled -¥6.6 billion, placing the company in negative territory for now. Looking ahead, analyst forecasts show a steady recovery, projecting FCF to reach ¥47.2 billion by 2026 and progressing to ¥106.6 billion by 2029. Beyond these analyst estimates, further years are extrapolated based on previous growth trends, with 2035’s projected FCF at about ¥153.6 billion. All projections use data sourced in yen.

Using a 2 Stage Free Cash Flow to Equity model, the DCF analysis calculates Kyowa Kirin's intrinsic value at ¥6,068 per share. Compared to the current share price, this number suggests that the stock is trading at a 60.7% discount to its fair value, meaning it looks significantly undervalued by this metric.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Kyowa Kirin is undervalued by 60.7%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Kyowa Kirin Price vs Earnings

The Price-to-Earnings (PE) ratio is widely regarded as a powerful valuation tool for profitable companies, since it reflects how much investors are willing to pay for each unit of earnings generated. This metric helps investors compare the current market price of a stock to its underlying profitability, making it useful for evaluating established businesses like Kyowa Kirin.

A “normal” or “fair” PE ratio depends on both the expected growth of a company’s earnings and how risky its future cash flows appear. Higher growth prospects typically justify a higher PE, while increased risk or uncertainty tends to pull the multiple down.

Right now, Kyowa Kirin’s PE ratio sits at 32.47x. This is noticeably higher than the pharmaceuticals industry average of 15.64x, as well as the average among peer companies, which is 23.25x. On paper, this suggests investors are expecting more growth or lower risk compared to the broader sector.

Simply Wall St’s "Fair Ratio" blends together factors like Kyowa Kirin’s industry, profit margins, expected earnings growth, company size and risk profile to come up with a customized benchmark. Unlike the simple comparison to peers or industry averages, this tailored approach provides a more accurate view of what Kyowa Kirin’s PE should be, given its unique characteristics.

For Kyowa Kirin, the Fair Ratio is computed at 23.24x, which means the current PE of 32.47x is above what the fundamentals would typically justify. This points toward the stock being overvalued at the moment based on its earnings power and outlook.

Result: OVERVALUED

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

Upgrade Your Decision Making: Choose your Kyowa Kirin Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your story behind a company: it’s how you combine your personal assumptions about Kyowa Kirin’s future revenue, earnings, and margins with the numbers, turning dry financial data into a compelling big-picture investment thesis.

Narratives connect these stories directly to a financial forecast, and then to a calculated fair value, helping you visualize the real impact of your perspective on where the company should trade. Narratives are designed to be accessible tools, available to millions of investors right on the Community page at Simply Wall St, letting anyone quickly craft or explore investment stories with confidence.

What makes Narratives powerful is that they update dynamically with new information, like earnings reports or big news events, so your outlook is always relevant. By comparing a Narrative’s Fair Value to the actual share price, you get a straightforward sense of whether it is time to buy or sell. For example, one Kyowa Kirin Narrative might see a high fair value based on strong growth, while another may forecast a lower value due to more cautious assumptions, letting you decide which story makes the most sense for you.

Do you think there's more to the story for Kyowa Kirin? 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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