Assessing Harrow (HROW) Valuation Following Q2 Profit Return and Raised Revenue Guidance

If you have been watching Harrow (HROW) lately, the company just gave investors plenty to talk about. Fresh off its second-quarter earnings release, Harrow reported a striking jump in revenue and moved from a net loss last year to a net profit for the quarter. On top of that, management reaffirmed its positive revenue guidance for the full year, signaling confidence in the momentum of the business.

These updates have clearly gotten the market’s attention. After a sluggish stretch over the past year, Harrow shares have surged almost 49% in the past three months, outpacing many peers. This renewed momentum follows not only the return to quarterly profitability but also a series of positive signals from leadership as they anticipate a significant increase in revenue for the rest of the year.

With Harrow’s strong Q2 results and positive guidance now public, the big question is whether the market is still underestimating the company or if the current price already reflects all anticipated future growth.

Most Popular Narrative: 34.6% Undervalued

Based on the most popular community narrative, Harrow is currently viewed as significantly undervalued. Its fair value is estimated to be more than a third higher than the current share price. This optimistic view relies on bullish projections for the company’s future earnings power and margin expansion.

The rapidly growing demand for Harrow's portfolio of specialty ophthalmic drugs, particularly VEVYE, IHEEZO, and TRIESENCE, is positioned to accelerate further as aging populations and increased prevalence of chronic ocular diseases expand the baseline patient pool. This is seen as supporting sustainable long-term revenue growth.

Curious about what is fueling this bold price target? There is a mix of high growth, expanding margins, and a future industry-matching earnings multiple. The real twist lies in the ambitious projections driving these numbers. Interested in the financial forecasts behind this optimism? The key assumption could leave skeptics speechless.

Result: Fair Value of $59.78 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, much depends on Harrow's flagship products maintaining momentum. Any slowdown or new competition could quickly challenge these bullish assumptions.

Find out about the key risks to this Harrow narrative.

Another View: SWS DCF Model Tells a Stronger Story

While the most popular narrative sees Harrow as significantly undervalued, our DCF model arrives at an even more optimistic estimate of fair value. This perspective focuses on long-term cash flow forecasts rather than near-term market comparisons. Could this model be overlooking something, or does it reveal hidden upside?

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 Harrow 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 Harrow Narrative

If you have a different take or would rather dig into the numbers on your own, you can craft your personalized narrative in just a few minutes. So why not do it your way?

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Harrow.

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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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