Has Arcutis’ 106% 2025 Surge Outrun Its DCF Value and Sales Multiple?

• If you are wondering whether Arcutis Biotherapeutics at around $29.96 is still a smart bet after its big run, you are not alone. This piece will dig into what that price actually implies.
• The stock has pulled back about 3.2% over the last week, but it is still up 21.0% over 30 days and a striking 105.8% year to date, with a 137.6% gain over the last year that has clearly reset market expectations.
• Much of that momentum has been driven by optimism around its dermatology pipeline and regulatory milestones, alongside growing investor interest in mid cap biotech names with differentiated assets. At the same time, sector wide swings and shifting risk appetite have added extra volatility. That makes it even more important to separate narrative from underlying value.
• On our checks, Arcutis scores just 2 out of 6 for undervaluation, so we will walk through what different valuation models say, then finish with a more holistic way to judge whether the current price truly reflects the opportunity.

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

Approach 1: Arcutis Biotherapeutics Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth by projecting the cash it could generate in the future and discounting those cash flows back to today in dollar terms.

For Arcutis Biotherapeutics, the latest twelve month free cash flow is negative at about $45.4 million, which is typical for a biotech company that is still investing heavily in its pipeline. Analysts expect this to change meaningfully, with free cash flow projected to reach around $93 million by 2026 and about $469.1 million by 2035, based on a mix of analyst forecasts through 2029 and then gradually slowing growth estimates from Simply Wall St.

Using a two-stage Free Cash Flow to Equity model, these projected cash flows are discounted to the present to arrive at an estimated intrinsic value of roughly $69.91 per share. Compared with the current share price of around $29.96, the DCF output suggests the stock may be about 57.1% undervalued on this basis.

Result: UNDERVALUED (DCF basis)

Our Discounted Cash Flow (DCF) analysis suggests Arcutis Biotherapeutics is undervalued by 57.1%. Track this in your watchlist or portfolio, or discover 920 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 Arcutis Biotherapeutics.

Approach 2: Arcutis Biotherapeutics Price vs Sales

For companies like Arcutis that are still moving toward sustainable profitability, the price to sales multiple is often a more practical yardstick, as it focuses on how much investors are paying for each dollar of current revenue rather than earnings that may still be negative or volatile.

In general, higher growth potential and lower perceived risk justify a richer price to sales ratio, while slower growth or greater uncertainty should pull that multiple down. Arcutis currently trades on a price to sales of about 11.54x, which is slightly above the broader Biotechs industry average of around 11.34x and also above the peer group average of roughly 9.75x.

Simply Wall St goes a step further with its Fair Ratio, an estimate of what Arcutis’ price to sales should be given its specific growth outlook, profitability profile, industry, market cap and risk factors. That Fair Ratio sits at about 10.09x, which is more tailored than a blunt comparison to peers or the sector, because it adjusts for the company’s unique mix of strengths and risks. Since the current 11.54x multiple is meaningfully higher than this 10.09x Fair Ratio, the shares look somewhat expensive on this measure.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1439 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Arcutis Biotherapeutics Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to attach a clear story about the business to the numbers such as your assumed fair value and expectations for Arcutis Biotherapeutics future revenue, earnings and margins, linking what you believe about its products, risks and market to a financial forecast and then to a fair value estimate you can compare to today’s share price to decide whether to buy, hold or sell.

Narratives on Simply Wall St, available to millions of investors through the Community page, are easy to use and are updated dynamically as new information like earnings releases, trial data or FDA decisions arrive. This means your story and valuation can evolve with the facts rather than staying static.

For example, one Arcutis Narrative might see rapid adoption of ZORYVE and a fair value around $40 per share, while a more cautious Narrative focused on execution and payer risks might land closer to $21 to $31. This illustrates how different perspectives on the same company can lead to very different, but clearly explained, estimates of what the stock is worth.

Do you think there's more to the story for Arcutis Biotherapeutics? 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.

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