ImmunityBio (IBRX): Evaluating Valuation Following Revenue Growth and Improved Q3 Results

ImmunityBio (IBRX) drew investor attention after releasing its third quarter earnings. The report revealed revenue climbing substantially to $32 million and a narrowed net loss compared to the same period last year. The improved results have prompted fresh discussion around the company’s progress.

See our latest analysis for ImmunityBio.

Despite the standout jump in revenue and improving losses, ImmunityBio’s share price return has struggled over the past year. The 1-year total shareholder return is -57.35%, reflecting continued investor caution even as operational results improve. Momentum has faded since the recent earnings spike, suggesting some uncertainty remains for the longer-term outlook.

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The question for investors now is whether ImmunityBio's sharp decline over the past year signals an undervalued opportunity, or if market sentiment has already accounted for all future growth prospects.

Price-to-Sales of 24.6x: Is it justified?

ImmunityBio currently trades at a price-to-sales ratio of 24.6x, which reflects a premium to both its peers and the broader biotech sector. The last close price of $2.06 represents a discount relative to its potential value if strong growth continues.

The price-to-sales ratio gauges how much investors are willing to pay per dollar of revenue. It is especially relevant for biotech companies like ImmunityBio that are yet to achieve sustained profitability but may have high expectations for future sales expansion.

ImmunityBio’s 24.6x multiple is notably higher than the US Biotechs industry average of 12.1x and also above the peer average of 20x. This suggests the market is pricing in strong future growth potential, but it also means the stock is expensive compared to comparable companies. The estimated fair price-to-sales ratio for ImmunityBio, based on regression analysis, stands at 31.2x. This indicates there could still be upward re-rating if growth targets are met.

Explore the SWS fair ratio for ImmunityBio

Result: Price-to-Sales of 24.6x (OVERVALUED)

However, ongoing net losses and a recent streak of declining share price returns could challenge the case for significant upside in the near term.

Find out about the key risks to this ImmunityBio narrative.

Another View: SWS DCF Model Suggests Undervaluation

While ImmunityBio's price-to-sales ratio paints an expensive picture relative to peers, our DCF model offers a different perspective. It estimates a fair value of $4.94 per share compared to the current price of $2.06, indicating the stock could be undervalued if cash flows materialize as projected. However, does this mean the market is missing something, or are there risks the model cannot fully account for?

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 ImmunityBio 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 864 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 ImmunityBio Narrative

If you see the numbers differently or want to build your own view of ImmunityBio, it's easy to generate your own narrative in just a few minutes. Do it your way

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