Assessing Indivior (INDV) Valuation Following a 96% Share Price Surge This Year

Indivior (INDV) shares have moved up around 3% over the past week, catching the attention of investors interested in the company’s recent performance. The stock is trading at $24.54 following a strong year-to-date run.

See our latest analysis for Indivior.

Indivior’s momentum has been tough to ignore lately, with a 96% share price return so far this year and a 207% total return for shareholders over the past twelve months. After such a strong run in recent months, some investors are watching to see if confidence continues to build or if the stock starts to settle back down.

If Indivior’s surge has you rethinking your watchlist, now is the perfect time to broaden your search and discover fast growing stocks with high insider ownership

With Indivior’s share price surging to fresh highs, the big question now is whether the stock still offers value at these levels or if the recent gains simply reflect the market’s expectations for future growth. Is there room left for buyers, or has the opportunity already been priced in?

Price-to-Earnings of 57.8x: Is It Justified?

Indivior currently trades at a price-to-earnings (P/E) ratio of 57.8x, putting it far ahead of both its peer group and the broader US Pharmaceuticals industry. With a last close of $24.54, the market is pricing in powerful earnings growth and strong future prospects, but also heightened expectations.

The price-to-earnings ratio is widely followed as a quick measure of how much investors are paying for a company’s recent profits. In Indivior’s case, a high P/E could reflect optimism around forecasted profit growth, especially following its transition to profitability.

However, at 57.8x, Indivior’s P/E is substantially higher than the US Pharmaceuticals industry average of 17.9x and the peer group average of 20.9x. It also stands out against the estimated fair P/E ratio of 29.7x. This shows that the market is pricing in expectations well above historical or sector norms. This gap could narrow if Indivior delivers on aggressive profit growth, or widen if it falls short.

Explore the SWS fair ratio for Indivior

Result: Price-to-Earnings of 57.8x (OVERVALUED)

However, risks such as slower than expected revenue growth or failing to meet high market expectations could put pressure on Indivior’s lofty valuation.

Find out about the key risks to this Indivior narrative.

Another View: Deep Discount to Intrinsic Value?

While the high price-to-earnings ratio suggests Indivior could be expensive, our DCF model tells a different story. Based on projected future cash flows, Indivior’s current price appears to be trading at a steep 65% discount to its estimated fair value. Could this point to a hidden opportunity, or does it reflect hidden risks?

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 Indivior 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 Indivior Narrative

If you want to dig deeper or reach your own conclusions, you can easily build a personal view using the data in just a few minutes with Do it your way.

A great starting point for your Indivior research is our analysis highlighting 3 key rewards and 3 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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