Is Alnylam Pharmaceuticals Stock Justified After 73.9% Surge and Clinical Trial Milestones?

• Wondering if Alnylam Pharmaceuticals stock offers real value, or if recent momentum has left the price running ahead of its fundamentals? You're definitely not alone in asking this right now.
• Over the past year, the stock has soared 73.9% and is up 235.9% over five years, although it's pulled back -5.2% in the last week and -5.8% over the past month. These are clear signals that growth potential and risk perceptions are shifting.
• Much of this action comes as investors have responded eagerly to groundbreaking clinical trial milestones and promising drug pipeline updates. This is particularly true for the company’s RNAi therapeutics portfolio, which continues to generate buzz and attract partnerships in the pharma world.
• Despite all the excitement, Alnylam Pharmaceuticals notched a valuation score of 2 out of 6 according to our latest value checks. We’ll dig into what that means next and even share a more insightful way to understand value by the end of this article.

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

Approach 1: Alnylam Pharmaceuticals Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) valuation model projects Alnylam Pharmaceuticals’ expected cash flows into the future and then discounts them back to today’s dollars to estimate what the business is really worth. It is a common technique for companies with long-term growth paths and helps investors look past market swings to the company’s underlying value.

Currently, Alnylam’s Free Cash Flow (FCF) is $195.74 million. Analysts suggest this figure could climb sharply, with projections pointing to a FCF of $3.04 billion by 2029. It is important to note that while there are detailed estimates for the next five years, projections beyond that rely on Simply Wall St’s own extrapolation based on recent trends and analyst perspectives.

This all translates into an estimated intrinsic value of $603.51 per share using a two-stage Free Cash Flow to Equity model. Given the current share price, this DCF analysis suggests the stock is trading at a 27.7% discount to its intrinsic value. This indicates meaningful upside potential for investors who believe in the company’s growth story.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Alnylam Pharmaceuticals is undervalued by 27.7%. Track this in your watchlist or portfolio, or discover 922 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 Alnylam Pharmaceuticals.

Approach 2: Alnylam Pharmaceuticals Price vs Sales

The Price-to-Sales (P/S) ratio is often a preferred valuation measure for companies like Alnylam Pharmaceuticals that are still ramping up profitability but have impressive revenue growth. This is because, in early-stage or growth biotechs, net earnings can be volatile or negative due to heavy ongoing R&D investments. Sales can tell a clearer story about underlying business momentum.

It is important to understand that expectations for growth and risk can drive a “normal” or “fair” P/S ratio higher or lower. For high-growth biotech stocks, investors are sometimes willing to pay much more for each dollar of sales, reflecting anticipated future breakthroughs and upside. At the same time, they will also discount companies for higher risks in competitive and regulatory environments.

Alnylam Pharmaceuticals currently trades at a P/S ratio of 18x. This is significantly higher than the biotech industry average of 12x and above the peer average of 9x. However, Simply Wall St’s proprietary “Fair Ratio” model, which takes into account Alnylam’s sales growth, strong margins, industry position, market cap, and risk factors, estimates a fair P/S ratio of 16x for the company.

The Fair Ratio is a more insightful benchmark than just comparing to peers or the industry because it considers the unique growth profile, margins, and risks specific to Alnylam. Although industry and peer comparisons provide useful context, the Fair Ratio aims to reflect what investors should reasonably pay given Alnylam’s outlook and fundamentals.

Comparing the Fair Ratio of 16x with the actual P/S of 18x, the stock appears somewhat expensive based on sales, but not drastically so.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1443 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Alnylam Pharmaceuticals Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your story about a company, a way to connect your personal perspective on Alnylam Pharmaceuticals’ future with specific financial forecasts, like what you think revenue, profit margins, and fair value could become over time. Narratives link what you know about Alnylam’s medicines or strategy to numbers and a clear estimate of worth, helping you turn your beliefs into actionable insights.

This approach is available to everyone on Simply Wall St’s Community page, used by millions of investors worldwide. It is designed to make analysis intuitive, so you can easily compare your Narrative’s fair value to the current share price and decide whether now is the right time to buy or sell. Narratives update automatically whenever major news, earnings, or new data come out, keeping your thesis current without extra work.

For example, one investor might take an optimistic Narrative, forecasting Alnylam’s earnings at the highest analyst estimate of $4.3 billion and setting a Fair Value target of $583.00, while a more cautious investor could use the lowest estimate of $104.4 million in earnings, resulting in a Fair Value closer to $236.00. Narratives empower you to invest with conviction, backed by your own logic and up-to-date information.

Do you think there's more to the story for Alnylam Pharmaceuticals? 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com