Is Ionis Pharmaceuticals Still Attractive After 85% Rally and ALS Drug Approval?

If you have been watching Ionis Pharmaceuticals lately, you are definitely not alone. The stock is having quite the run, up 5% in the past week and nearly 50% in just the last 30 days. Even more eye-catching, Ionis is up 84.8% year-to-date and 56.9% over the past year, with solid double-digit gains stretching back three and even five years. Those kinds of returns naturally raise the question: is it still a smart buy now, or has the ship already sailed?

Much of this momentum comes as biotech stocks have gotten renewed attention amid positive clinical trial results for gene-targeted therapies. This is the very area where Ionis specializes. Broader optimism about the sector in 2024 is pulling up multiple names, but Ionis stands out for its consistent performance and intriguing growth story.

Here is where it gets interesting if you are a valuation-minded investor. Based on a six-point valuation checklist, Ionis scores a 2, meaning it is undervalued in two out of six standard checks. Not exactly a screaming bargain, but not overpriced either considering the run-up.

So what can those numbers tell us about Ionis’s true value? Let’s break down what each of the main valuation methods reveals. Be sure to stick around, because the best way to think about the company’s worth might surprise you.

Ionis Pharmaceuticals scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Ionis Pharmaceuticals Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and discounting them back to today's value. This approach is commonly used to assess whether a stock's current price reflects its long-term business prospects.

For Ionis Pharmaceuticals, analysts forecast a significant transformation in its cash flow generation. The company currently reports a negative Free Cash Flow (FCF) of approximately $-277 million, but projections suggest a turnaround in the coming years. By 2029, FCF is expected to reach around $340 million, with further increases to nearly $1.7 billion by 2035 based on extrapolated estimates. These projections, reported in USD, reflect both near-term analyst expectations and longer-term scenario modeling.

Plugging these cash flows into the DCF formula using a two-stage Free Cash Flow to Equity approach, the estimated fair value for Ionis Pharmaceuticals comes out to $159.58 per share. With the calculated DCF discount at 59.8%, this suggests the stock is trading at a sizable discount to its intrinsic value based on future cash flow potential.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Ionis Pharmaceuticals is undervalued by 59.8%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Ionis Pharmaceuticals Price vs Sales

The Price-to-Sales (P/S) ratio is a go-to valuation multiple when assessing companies that may not yet be profitable, but show meaningful revenue growth and market traction. For biotechs like Ionis Pharmaceuticals, which often reinvest heavily and forecast long development cycles before profitability, the P/S ratio provides a more useful snapshot compared to earnings-based metrics.

Industry norms for the P/S ratio are shaped by both growth potential and perceived risk. Higher growth and lower risk generally support premiums, while uncertain outlooks or declining prospects drive discounts. Ionis currently trades at a P/S ratio of 10.8x, which is just above the biotech industry average of 9.9x and also higher than the peer average of 6.7x. At first glance, this might raise eyebrows regarding valuation.

This is where Simply Wall St’s proprietary “Fair Ratio” provides a sharper comparison. The Fair Ratio, calculated by factoring in revenue growth, margins, company size, industry, and risk profile, represents what a rational P/S multiple for Ionis should be. In this case, Ionis’s Fair Ratio is 4.2x, significantly below both its current P/S and industry averages. Instead of using blanket benchmarks, the Fair Ratio captures company-specific dynamics that could justify either a premium or a discount.

Since Ionis’s actual P/S ratio is well above its Fair Ratio, the stock appears expensive when adjusting for its unique business realities and risk factors.

Result: OVERVALUED

PS 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 Ionis Pharmaceuticals Narrative

Earlier, we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your story about a company, an accessible framework that lets you connect your perspective on Ionis Pharmaceuticals to the numbers you think matter most, like fair value, future revenue, earnings, and margins.

Narratives work by linking a company’s unique story, such as its strategic vision or pipeline milestones, to transparent financial forecasts that feed directly into a fair value estimate. Instead of relying solely on ratios or analyst targets, you can use Narratives on Simply Wall St’s Community page, where millions of investors build and share their own evidence-based views.

By comparing your Narrative’s fair value to the current market price, you get a dynamic signal for when to buy or sell. Narratives automatically update as new news or earnings arrive, ensuring your analysis evolves alongside real developments.

For example, among Ionis Pharmaceuticals Narratives, some investors see blockbuster pipeline launches, expanding patient pools, and market-leading technology justifying fair values as high as $96.00. On the other hand, more cautious perspectives flag regulatory hurdles and pricing risk, setting fair values as low as $43.00. This lets you quickly see and compare both the optimism and risks in a single place.

Do you think there's more to the story for Ionis Pharmaceuticals? 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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