IDEAYA Biosciences (IDYA): Assessing Valuation After Swing to Profit and Strong Quarterly Turnaround

IDEAYA Biosciences (IDYA) just announced strong third quarter earnings, swinging from a net loss last year to a net income of $119 million. The company also reported revenue of $208 million for the period. Investors are watching closely, as this marks a major financial turnaround for the company.

See our latest analysis for IDEAYA Biosciences.

IDEAYA Biosciences’ standout quarterly earnings have captured investor attention, but recent market momentum tells its own story. After a 30.95% 90-day share price return, IDEAYA is up 22.77% for the year to date. However, the 1-year total shareholder return still sits slightly in the red, which serves as a reminder of past volatility despite impressive progress since 2022. Investors sensing a shift will be watching closely to see if operational gains can fuel a more sustained run.

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With the stock still trading well below analyst targets despite this quarter’s dramatic improvement, investors are left to decide: is there more upside ahead, or has the recent run already captured future growth?

Price-to-Sales of 12.6x: Is it justified?

IDEAYA Biosciences currently trades at a price-to-sales ratio of 12.6x, far above its industry peers. With the last close at $30.89, this points toward a rich valuation relative to sales.

The price-to-sales ratio reflects how much investors are willing to pay for each dollar of the company’s revenue. For biotech firms like IDEAYA, this metric is closely watched because many are not yet profitable, so revenue multiples become a key valuation anchor.

IDYA’s 12.6x price-to-sales ratio is substantially higher than both the U.S. Biotechs industry average of 10.8x and the broader peer group average of just 4.9x. When compared to the estimated fair price-to-sales ratio of 0.9x, IDYA looks extremely expensive. This suggests the stock price is being driven by optimism around future breakthroughs or rapid revenue growth. If market expectations shift, there is a long way down to reach more standard levels.

Explore the SWS fair ratio for IDEAYA Biosciences

Result: Price-to-Sales of 12.6x (OVERVALUED)

However, execution risk remains high. Any delays in new drug approvals or clinical results could quickly undermine the company’s current momentum.

Find out about the key risks to this IDEAYA Biosciences narrative.

Build Your Own IDEAYA Biosciences Narrative

If you see the story differently or want to dig into the numbers yourself, you can craft a personalized IDEAYA narrative in just a few minutes with Do it your way.

A great starting point for your IDEAYA Biosciences research is our analysis highlighting 1 key reward 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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