What Does the Recent Drop in Aurinia Shares Mean for Investors in 2025?

Trying to figure out what to do with your Aurinia Pharmaceuticals shares, or maybe if now is the time to get in? You are definitely not alone. Recent months have been a bit of a roller coaster. The stock closed recently at $11.35, and while it has dipped over the past week, sinking 13.6%, that pullback comes right after strong year-to-date and 12-month gains of 29.4% and an eye-popping 59.4%. Long-term holders have felt some pain with a 27.6% slide over five years, but the last few quarters have marked a definite change in market perception. Aurinia now seems to be on investors’ radar, and the mood has shifted toward cautious optimism.

Behind the scenes, market discussions have focused on the company’s drug pipeline and its strategy in the autoimmune space. These moves have reshaped how investors think about risk and potential reward for Aurinia, fueling recent stock volatility. That is exactly when a valuation check becomes vital.

If you are looking for the classic data-driven take, Aurinia currently checks the box for undervalued status in 3 out of 6 key measures according to my value scoring system, giving it a valuation score of 3. That is right in the middle, suggesting a company with both upside and risks to consider. But what do those valuation methods actually mean for you, and is there a better way to truly grasp Aurinia’s potential? Let’s break down the popular valuation techniques next, and stick around for a twist on valuation that could give you an even clearer picture at the end.

Aurinia Pharmaceuticals delivered 59.4% returns over the last year. See how this stacks up to the rest of the Biotechs industry.

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

The Discounted Cash Flow (DCF) model is a classic tool for valuing stocks. It estimates what a company is worth today, based on projections of how much cash the business will generate in the future. These future cash flows are then discounted back to their present value, because a dollar earned today is worth more than a dollar earned years from now.

For Aurinia Pharmaceuticals, the latest reported Free Cash Flow sits at $94.5 million. Analyst estimates trace a steady increase, projecting Free Cash Flow to reach $115 million by 2029. While analysts forecast results only for the next five years, further numbers are extrapolated out a full decade to provide a more complete view. Over this ten-year span, the trend points to consistent, though not explosive, cash flow growth.

Based on these projections, Aurinia’s fair value lands at $26.92 per share using the DCF approach. With the current stock price at $11.35, the model suggests the stock is trading at a 57.8% discount to its intrinsic value. This result positions Aurinia as significantly undervalued at today's market levels.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Aurinia Pharmaceuticals is undervalued by 57.8%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Aurinia Pharmaceuticals Price vs Earnings (P/E)

The Price-to-Earnings (P/E) ratio is one of the most reliable tools for valuing profitable companies. It shows how much investors are willing to pay today for a dollar of current earnings, making it especially useful for biotech companies like Aurinia that are generating meaningful profits.

Growth expectations and risk play a big role in determining what a “fair” P/E ratio should be. Fast-growing, lower-risk companies tend to command higher P/E multiples, while those with slower growth or higher risks often trade at a discount. Comparing across the sector, Aurinia’s P/E currently stands at 24.6x, which is above the Biotechs industry average of 16.7x but below the peer group average of 44.3x. This places Aurinia squarely in the middle, priced higher than most of the industry but notably cheaper compared to its higher-flying peers.

Simply Wall St's proprietary “Fair Ratio” takes things a step further. Instead of just comparing raw numbers, the Fair Ratio is custom-built for Aurinia, accounting for its specific growth prospects, risks, profit margins, industry dynamics, and market cap. For Aurinia, the Fair Ratio comes in at 18.5x. This tailored approach is more insightful than simple peer or industry comparisons, as it gives the most well-rounded view of whether the stock's valuation truly fits its fundamentals.

Since Aurinia’s actual P/E of 24.6x is meaningfully above the Fair Ratio of 18.5x, this method suggests that the market may be pricing in more optimism than the fundamentals alone support at current levels.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Aurinia Pharmaceuticals Narrative

Earlier, we mentioned a better way to understand valuation. Let us introduce you to Narratives, a smarter, story-driven approach to making investment decisions. A Narrative is simply your personal perspective about Aurinia Pharmaceuticals; it is the story you believe about the company’s future, brought to life through the numbers you think are realistic, such as revenue growth, earnings, and profit margins.

This approach goes beyond standard models, as Narratives explicitly link the “why” (your view of Aurinia’s business story and its catalysts) to the “how” (your forecast for financials), leading directly to a tailored Fair Value. Narratives are easy and accessible on Simply Wall St's Community page, where millions of investors actively share, compare, and discuss their analyses. They help you decide if now is the right time to buy or sell by comparing your calculated Fair Value to the current share price.

Additionally, Narratives are not set in stone; they update as news emerges, earnings are posted, or clinical milestones are reached, so your fair value adapts with the latest information. For example, one investor might believe pipeline progress and share buybacks will drive fair value as high as $17.00, while another, concerned about competition and single-product risk, might see fair value closer to $9.00. This is how Narratives provide every investor with a dynamic edge tailored to their view of Aurinia’s future.

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