Are Jazz Pharmaceuticals Shares Set for a Rebound After Recent Drug Approval in 2025?

If you are weighing your next move with Jazz Pharmaceuticals, you are not alone. Whether you are cautiously optimistic after the recent volatility in the biotech sector or just curious if this could be a golden value opportunity, Jazz is a name worth your attention right now. The share price has seen its fair share of turbulence, dipping 1.0% over the past week but ticking up 2.1% over the last month. Year to date, the stock is up 2.6%, and if you zoom out, the 12-month return stands at an impressive 14.5%. Step back even further and things appear more mixed, with a 3-year performance of -4.7% and a 5-year dip of -11.5%. Every investor knows that big recoveries often start where others only see losses.

Market sentiment has shifted in biotech, and Jazz is right in the middle of it. New advancements in rare disease research and fresh collaborations across the pharmaceutical landscape have brought renewed interest and, with it, reconsiderations about risk and reward. Interestingly, when looking at the numbers, Jazz Pharmaceuticals scores a perfect 6 on our value framework, indicating it is currently undervalued across every one of six key valuation checks.

So, how does this score stack up across different valuation techniques, and are traditional valuation tools enough? Let’s dive into the details. Stick around, as I will reveal a smarter, more forward-looking way to gauge Jazz’s value at the end of the article.

Jazz Pharmaceuticals delivered 14.5% returns over the last year. See how this stacks up to the rest of the Pharmaceuticals industry.

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

The Discounted Cash Flow (DCF) model estimates a company's value by projecting its future cash flows and then discounting them back to today's dollars. This approach provides a fundamental perspective on what the business might truly be worth based on its expected ability to generate cash in the future.

For Jazz Pharmaceuticals, the latest twelve months free cash flow stands at $1.13 Billion. Looking ahead, analysts forecast free cash flow to grow substantially, with projections reaching $2.03 Billion by 2029. While analyst estimates typically only extend five years, longer-term forecasts for Jazz are extrapolated to reflect continued, though moderating, growth beyond that period.

Based on these projections and using the two-stage Free Cash Flow to Equity model, Jazz Pharmaceuticals' intrinsic value is calculated at $771.17 per share. This is substantially above the current trading price, which suggests the stock is about 83.5% undervalued according to this model.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Jazz Pharmaceuticals is undervalued by 83.5%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Jazz Pharmaceuticals Price vs Sales

For companies like Jazz Pharmaceuticals, the Price-to-Sales (P/S) ratio is often the preferred valuation metric, especially when profits can be impacted by non-cash charges or one-off items typical in the biotech sector. This ratio measures how much investors are willing to pay for each dollar of the company’s sales, making it a reliable gauge for businesses with steady revenue even if earnings are volatile.

Growth expectations and the company’s risk profile play a major role in what is considered a “normal” P/S ratio. Higher growth prospects or lower risk usually demand a higher multiple, while mature or riskier companies often command a lower one.

Jazz Pharmaceuticals currently trades at a P/S ratio of 1.89x. This is notably below both the industry average of 4.64x and the peer average of 4.14x. However, simply comparing to peers or the industry may overlook Jazz’s unique mix of growth rates, margins, and risk factors.

That is where Simply Wall St’s Fair Ratio comes in. This proprietary metric predicts the multiple Jazz should receive, taking into account its earnings growth potential, profit margins, industry positioning, and company-specific risks. For Jazz, the Fair Ratio stands at 5.90x, significantly higher than its current level. This suggests the market may be underestimating Jazz’s prospects at this time.

Result: UNDERVALUED

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 Jazz Pharmaceuticals Narrative

Earlier, we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a simple, story-driven approach where you describe your perspective on a company, such as Jazz Pharmaceuticals, by outlining the assumptions you believe are most important, like future revenue, profit margins, and fair value. Narratives connect the company’s underlying story directly to your financial forecast, turning your expectations about Jazz’s future into an estimated fair value.

This approach is accessible and dynamic. On Simply Wall St’s Community page, millions of investors can create and update Narratives with just a few clicks. Narratives make it straightforward to spot opportunities to buy or sell, as you can quickly compare your forecasted fair value against the current share price. They also automatically refresh as the latest news or earnings are released, keeping your investment decisions up-to-date and grounded in both current events and thoughtful scenarios. For example, some investors currently value Jazz as high as $230 per share, believing in blockbuster therapy launches and international growth, while others, more cautious about patent risks and debt, have targets as low as $147 per share.

Do you think there's more to the story for Jazz 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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