CG Oncology (CGON): Valuation Insights Following Strong Revenue Growth and Widening Losses in Latest Results

CG Oncology (CGON) has just released its latest quarterly and nine-month financial results, showing revenue growth compared to a year ago, even as net losses widened. This update offers a fresh angle for investors tracking CGON’s momentum and financial health.

See our latest analysis for CG Oncology.

After rallying strongly through the last quarter, CG Oncology’s share price has climbed 57.7% over the past 90 days and sits at $42.44. This momentum has sparked wider interest, even as the one-year total shareholder return stands at 26.8%. This is a positive sign that recent milestones and the new CFO appointment are shifting the risk-return conversation for investors.

If CG Oncology’s recent leadership changes and upswing have you looking for broader opportunities, explore other healthcare stocks with growth potential using our curated screener: See the full list for free.

With CG Oncology’s shares surging and new financials on the table, the real question for investors now is whether the stock remains undervalued or if the market has already factored in all that future growth potential.

Price-to-Book Ratio of 5x: Is it justified?

CG Oncology’s current price-to-book ratio stands at 5, putting it well above the US Biotechs industry average of 2.5x. With shares closing at $42.44, the stock appears relatively expensive compared to its industry peers on this specific valuation measure.

The price-to-book ratio is a key metric for biotechs and early-stage pharma companies because it compares market value to net assets. Investors use it to gauge whether growth potential and intangible assets justify the premium over book value. In CG Oncology’s case, the market seems to be pricing in aggressive future revenue and milestone achievements, despite limited current revenues and ongoing losses.

Compared to the 2.5x industry average, CG Oncology’s 5x price-to-book multiple sends a clear signal: investors are betting this company will outperform its peers in the long run. However, when looking at a peer set, CG Oncology appears attractively valued relative to the peer average of 13.9x, suggesting mixed signals about just how much upside is actually priced in at this stage.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Book Ratio of 5x (OVERVALUED)

However, ongoing net losses and high valuation multiples remain key risks. These factors could challenge the bullish outlook if growth expectations fail to materialize.

Find out about the key risks to this CG Oncology narrative.

Another View: What Does the SWS DCF Model Suggest?

While the price-to-book ratio paints CG Oncology as overvalued, our DCF model tells a very different story. According to the SWS DCF model, CGON’s shares are trading almost 89% below their estimated fair value. This significant gap could signal a potential value opportunity, but it also raises questions about the assumptions behind each method.

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 CG Oncology 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 918 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 CG Oncology Narrative

If you want to take a different angle or dive deeper into the numbers, you can analyze the data and develop your own view in just a few minutes. Do it your way

A great starting point for your CG Oncology research is our analysis highlighting 2 key rewards and 3 important warning signs 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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