CRISPR Therapeutics (CRSP): Evaluating Valuation Following a Strong Share Price Rally

CRISPR Therapeutics (CRSP) shares have attracted attention lately, with investors eyeing recent returns and the company’s value proposition. The stock has climbed 38% over the past month and is up 76% year to date, outpacing many in its sector.

See our latest analysis for CRISPR Therapeutics.

CRISPR Therapeutics’ recent share price surge reflects growing optimism around its pipeline and sector momentum. A strong run this year has reinforced the company’s comeback story. The 1-year total shareholder return sits at 62%, signaling building momentum for investors willing to take the ride.

If you’re keen to see what else is taking off in the biotech world, explore the latest discoveries in our See the full list for free..

After such a rapid ascent, investors now face the critical question: Is CRISPR Therapeutics undervalued based on its fundamentals, or has the recent rally already priced in all anticipated future growth? Is there still a buying opportunity?

Price-to-Book of 3.9x: Is it justified?

CRISPR Therapeutics is currently trading at a price-to-book (P/B) ratio of 3.9x, which provides a snapshot of how much investors are paying compared to the company’s net assets. With a recent closing price of $72.82, this ratio is a key indicator for high-growth, asset-light businesses in biotech. In this sector, tangible assets may play a different role compared to more mature industries.

The price-to-book ratio measures a company’s market value relative to its book value and helps to assess whether the stock is undervalued or overvalued based on balance sheet fundamentals. For biotech firms like CRISPR Therapeutics, this multiple can reflect both market optimism about future breakthroughs and caution about ongoing losses. The market is clearly pricing in substantial expectations around future pipeline success and sector momentum, despite current unprofitability.

Compared with the US Biotechs industry average of 2.5x, CRISPR Therapeutics’ higher P/B indicates that investors are willing to pay a premium for its assets. This premium may reflect confidence in the company’s strong revenue growth forecast, but it also sets a high bar for execution given the lack of profitability so far.

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

Result: Price-to-Book of 3.9x (OVERVALUED)

However, risks such as persistent net losses and execution missteps could quickly challenge the current optimism surrounding CRISPR Therapeutics’ valuation and outlook.

Find out about the key risks to this CRISPR Therapeutics narrative.

Another View: Discounted Cash Flow Suggests Undervaluation

While the price-to-book approach flags CRISPR Therapeutics as expensive, our DCF model tells a different story. The SWS DCF model values the stock at $134.16, which is far above the current market price of $72.82. This signals potential undervaluation from a cash flow perspective.

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 CRISPR Therapeutics 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 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 CRISPR Therapeutics Narrative

If you have your own perspective or want to dig into the numbers yourself, you can easily build your own take on CRISPR Therapeutics' outlook in under three minutes. Do it your way.

A great starting point for your CRISPR Therapeutics research is our analysis highlighting 2 key rewards and 1 important warning sign 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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