Assessing Incyte After 35% Rally and Pipeline Updates: Are Shares Fairly Priced in 2025?

Deciding what to do with Incyte stock? You are not alone, especially as shares continue to quietly push higher. After a strong run, up 26.7% year-to-date and a stunning 35% in the past twelve months, Incyte is getting more attention from both long-term investors and those just dipping a toe into biotech stocks. Over the past week alone, the stock gained another 0.9%, adding to its steady momentum and sparking plenty of speculation about what is fueling these moves.

While some of this recent strength seems tied to positive pipeline updates and a broader shift in sentiment toward innovative drug developers, there has also been a general uptick in interest across the biotech sector. A few noteworthy announcements about regulatory progress and new research partnerships have certainly reinforced confidence in Incyte’s future prospects, even if they have not triggered huge single-day price spikes. Still, what really matters for most investors is whether the stock is undervalued, fairly valued, or starting to look a little pricey.

To answer that, we can look at its valuation score, a simple but telling metric that combines several classic valuation checks. On a scale where the maximum is six, Incyte currently earns a score of 3, signaling it is undervalued by half of the measures analysts typically use. But valuation is more than just a number. To understand whether Incyte is truly a buy right now, let’s dig into how these numbers are calculated and keep an eye out for a smarter way to think about valuation before we wrap up.

Incyte delivered 35.0% returns over the last year. See how this stacks up to the rest of the Biotechs industry.

Approach 1: Incyte Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting future cash flows and discounting them back to today's dollars. For Incyte, this approach examines how much cash the company is expected to generate and weighs those future dollars against the value of money today, which is an essential step for investors sizing up long-term potential.

Incyte’s latest free cash flow stands at $918.9 million, all reported in USD. Analyst forecasts suggest that free cash flow is expected to climb over the coming years, with projections calling for $1.42 billion by 2029. Notably, estimates out to 2035 are mainly driven by internal model assumptions, since analysts typically provide guidance for only the next five years.

Based on these inputs, Incyte’s intrinsic value comes out to $163.57 per share using the DCF model. This suggests the stock trades at a significant 46.2% discount to its estimated fair value, a notable margin that points to undervaluation by this metric alone.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Incyte.

Our Discounted Cash Flow (DCF) analysis suggests Incyte is undervalued by 46.2%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Incyte Price vs Earnings

For profitable companies like Incyte, the Price-to-Earnings (PE) ratio is one of the most straightforward and widely used valuation metrics. It shows how much investors are willing to pay today for each dollar of current earnings, making it a solid, apples-to-apples way to compare companies across the industry.

A "fair" PE ratio is influenced by factors including a company’s growth outlook and risk profile. Companies expected to deliver stronger earnings growth or that have lower risk generally deserve a higher PE multiple, while those with shakier prospects or more volatility often trade at a lower multiple.

Currently, Incyte trades at a PE of 19.7x. That puts it above the Biotechs industry average of 16.2x, but slightly below the average for its immediate peers at 21.5x. Rather than relying only on these raw comparisons, the proprietary Fair Ratio from Simply Wall St takes a multi-factor approach. This metric sets a benchmark multiple (18.8x for Incyte) based on the company’s earnings growth, profit margins, industry trends, market cap and risk profile, providing a clearer picture than peer or industry averages alone.

Since Incyte’s current PE ratio is just a touch above the Fair Ratio (19.7x vs 18.8x), that suggests the stock is valued about right using this approach. Investors considering a buy today can feel reassured the price aligns closely with what its growth and risk profile would justify.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Incyte Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is much more than just a number; it is the story you believe about a company, a clear and personal perspective that connects your view of Incyte’s future revenue, earnings, and profit margins to what you think its fair value should be.

Narratives put your thinking front and center, linking the bigger picture (pipeline launches, risks, and global strategy) to a tangible financial forecast and ultimately to a live fair value. Available right within Simply Wall St’s Community page and used by millions of investors, this tool makes it easy for anyone to articulate their thesis, tweak assumptions, and instantly see updated fair value estimates as soon as new news or earnings drop.

Crucially, Narratives help you spot whether it’s time to buy, hold, or sell by showing the difference between your Fair Value and the current Price, so you always know if your view lines up with the market. For example, one investor’s bullish Narrative might see Incyte’s fair value as high as $110 if they expect successful pipeline launches and industry-beating profits. A cautious investor could set it at just $60 if they see risk from competition or patent expiries.

Do you think there's more to the story for Incyte? Create your own Narrative to let the Community know!

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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