Evaluating Eledon Pharmaceuticals (ELDN) Valuation Following Phase 2 BESTOW Results and Pipeline Progress

Eledon Pharmaceuticals (ELDN) is in the spotlight after presenting Phase 2 clinical trial results for its lead drug, tegoprubart, aimed at preventing rejection in kidney transplant patients. The data, while mixed on headline endpoints, has intensified market and medical sector curiosity about the company’s pipeline.

See our latest analysis for Eledon Pharmaceuticals.

Eledon’s share price took a dramatic hit this week, dropping nearly 50% in a single day after the Phase 2 trial update. This brought its year-to-date share price return to minus 52%. That plunge reflects mounting uncertainty around the timeline and likelihood of commercial success. Even so, long-term total shareholder return over five years now stands at minus 90%, highlighting just how much optimism has faded compared to earlier years. The stock's current volatility underscores both the risks and the potential upside if upcoming milestones can turn the narrative around.

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With shares now trading at a steep discount from analyst price targets, the question for investors is whether Eledon’s recent drop reflects unresolved risk or if the company is now undervalued and creating a fresh opportunity for future growth.

Price-to-Earnings of 8.4x: Is it justified?

Compared to its last close of $2.06, Eledon Pharmaceuticals looks undervalued on a price-to-earnings basis, especially when compared with peers. This low multiple may attract investors seeking value during periods of volatility.

The price-to-earnings (P/E) ratio measures the price investors are willing to pay for a dollar of current earnings. In biotech, this can highlight how future breakthroughs or setbacks are accounted for in the stock price. For Eledon, a P/E of 8.4x stands noticeably below both the US market average and sector peers.

Since this P/E is below the US Biotechs industry average of 17x and also the broader US market average of 18.1x, the market seems to be applying a significant discount to the company’s current profitability and growth prospects. The fair P/E ratio, calculated at 10.7x, indicates that if market sentiment improves, there could be potential for upward movement toward that level.

Explore the SWS fair ratio for Eledon Pharmaceuticals

Result: Price-to-Earnings of 8.4x (UNDERVALUED)

However, investors should note the ongoing uncertainty from clinical trial outcomes and the company's lack of revenue, as both could reignite volatility ahead.

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

Build Your Own Eledon Pharmaceuticals Narrative

If you’d rather dig deeper or see things from a different angle, you can shape your own view and analysis in just a few minutes with Do it your way.

A great starting point for your Eledon Pharmaceuticals research is our analysis highlighting 4 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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