Assessing Crinetics Pharmaceuticals (CRNX) Valuation After Recent Share Price Slide and Revenue Growth

Crinetics Pharmaceuticals (CRNX) shares have seen mixed movement over the past month, even as the company continues to report strong annual revenue growth. Investors are watching for updates that could influence the stock’s path forward.

See our latest analysis for Crinetics Pharmaceuticals.

After a tough start to the year, Crinetics Pharmaceuticals’ share price has lost some ground recently, slipping another 11% over the past month. Still, the stock’s longer-term momentum is impressive. There has been a 46% share price return over 90 days and a remarkable 117% total shareholder return over three years, suggesting investors remain optimistic about its future growth potential.

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With shares well below analyst targets and robust revenue growth on the books, investors may wonder if Crinetics is undervalued at current levels or if the market is already factoring in the company’s future potential.

Price-to-Book Ratio of 3.2x: Is it justified?

Crinetics Pharmaceuticals is currently trading at a price-to-book ratio of 3.2x, noticeably higher than the average for the US Pharmaceuticals industry. At a last close price of $40.00, this signals the market is assigning a premium to its net asset value.

The price-to-book ratio compares a company’s market value to its book value, which is often used for asset-rich or research-driven sectors like pharmaceuticals. Investors use this metric to gauge whether the stock is trading above or below the value of its tangible assets, factoring in future growth potential and risk profile.

While the current ratio suggests Crinetics appears expensive by this measure, especially relative to the industry’s average of 2.3x, it is actually good value when compared to its direct peers, where the average is much higher at 8.6x. This puts Crinetics in a unique position: more richly priced than the broader industry, yet still offering a discount relative to its closest competitors.

More context is warranted, as the fair value benchmark based on regression analysis could indicate where the market might ultimately re-rate the stock toward. However, there is insufficient data to provide a definitive fair ratio for Crinetics right now.

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

Result: Price-to-Book Ratio of 3.2x (ABOUT RIGHT)

However, weak one-year returns and ongoing net losses still pose risks that could challenge the bullish outlook if fundamentals do not improve.

Find out about the key risks to this Crinetics Pharmaceuticals narrative.

Another View: Discounted Cash Flow Paints a Different Picture

Looking at Crinetics Pharmaceuticals through the lens of our DCF model tells a different story. Based on our estimate, the shares are trading about 64% below their fair value. This suggests the stock may be deeply undervalued. Could this disconnect signal a real opportunity, or is the market seeing something the numbers miss?

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 Crinetics Pharmaceuticals 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 874 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 Crinetics Pharmaceuticals Narrative

If you see things differently or want to dig into the numbers yourself, you can easily build your own view in just a few minutes, and Do it your way.

A great starting point for your Crinetics Pharmaceuticals research is our analysis highlighting 2 key rewards and 2 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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