89bio (ETNB): Exploring Valuation After 62% Share Price Surge in the Biotech Sector

89bio (ETNB) shares have been on the move lately, with investors eyeing recent performance trends and weighing potential growth. The stock posted a 62% gain over the past month, which has turned heads in the biotech sector.

See our latest analysis for 89bio.

Momentum is definitely building for 89bio, with a strong 1-month share price return of 61.5% and noticeable buzz stemming from recent sector activity. That kind of move stands out even more when you consider the company’s 1-year total shareholder return of 107.3%. This signals a clear shift in how investors are viewing its potential growth and risk profile.

If this surge in biotech piques your curiosity, consider expanding your search and explore See the full list for free.

With such explosive gains in the rearview mirror, the pressing question is whether 89bio’s stock is still a bargain or if recent excitement means any future upside is already reflected in today’s price.

Price-to-Book Ratio of 4.2x: Is it justified?

With 89bio trading at a price-to-book ratio of 4.2x and a last close price of $14.84, the stock appears expensive compared to its direct industry peers.

The price-to-book ratio compares a company's market value to its book value, offering perspective on what investors are willing to pay for each dollar of net assets. This metric is particularly relevant in the biotech sector, where tangible assets and future potential can differ significantly from traditional earnings multiples.

While the 4.2x multiple indicates strong expectations for future growth or asset value realization, it is notably higher than the US Biotechs industry average of 2.4x. This makes 89bio look pricey relative to its sector. However, it is considered good value compared to the peer average price-to-book ratio of 30.2x, suggesting that among similar biotech companies, 89bio still appears somewhat reasonable despite its premium to the broader industry.

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

Result: Price-to-Book of 4.2x (OVERVALUED)

However, continued lack of revenue growth and persistent net losses remain important risks that could dampen 89bio’s positive momentum in the future.

Find out about the key risks to this 89bio narrative.

Build Your Own 89bio Narrative

If you think there is another side to this story, or want to dig deeper into the numbers yourself, you can build your own view in just a few minutes. Do it your way

A great starting point for your 89bio research is our analysis highlighting 4 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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