Ligand Pharmaceuticals (LGND): Evaluating Valuation After Upbeat Earnings and Raised 2025 Guidance

Ligand Pharmaceuticals (LGND) shares are catching attention after the company reported a surge in third quarter revenue and net income. The company also raised its full-year 2025 earnings outlook. Investors are weighing what this stronger growth could mean next.

See our latest analysis for Ligand Pharmaceuticals.

The momentum behind Ligand Pharmaceuticals has been unmistakable, with the stock racking up a robust 13.9% share price return over the past month and a remarkable 86.8% year-to-date gain. Recent earnings and upgraded guidance have sparked fresh optimism, and the longer view is equally compelling, with the total shareholder return hitting 148.7% over three years. Investors are clearly responding to the company’s stronger results and upbeat outlook.

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With shares sitting just below their price target after an impressive run-up, the key question for investors is whether Ligand remains undervalued or if the market is already pricing in all this future growth potential.

Most Popular Narrative: 1.8% Undervalued

At $202.48, Ligand Pharmaceuticals trades just below the most popular narrative's fair value estimate of $206.25. The story behind this narrow undervaluation is fueled by confidence in a robust royalty engine and expectations for fast profit growth, setting investor expectations for the next phase.

Opportunistic asset-light acquisitions and strong industry positioning support margin expansion, pipeline growth, and sustained revenue momentum. Heavy dependence on a few royalty assets, drug pricing pressures, and limited R&D investment increase risks to stable long-term revenue and earnings growth.

Read the complete narrative.

This narrative’s fair value comes from bold forecasts on margins and profit acceleration, which are rarely seen in the pharmaceutical sector. Which key financial lever does their thesis hinge on? Click through to see the core assumption that could redefine the story for Ligand’s valuation.

Result: Fair Value of $206.25 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, if drug pricing pressure intensifies or major royalty assets underperform, that could quickly change the outlook for Ligand’s future growth potential.

Find out about the key risks to this Ligand Pharmaceuticals narrative.

Another View: Multiples Send a Caution Signal

Looking at valuation from a different angle, Ligand Pharmaceuticals appears expensive when you compare its price relative to earnings. The company trades at 81.3 times earnings, much higher than both the US Pharmaceuticals industry average of 17.4 and its peer average of 19.1. Even compared to the fair ratio of 22.3, Ligand is trading at a steep premium. This sizable gap suggests the market is expecting continued outperformance. The question remains whether those lofty expectations will hold up.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Ligand Pharmaceuticals Narrative

If you want to dive deeper and form your own perspective, you can analyze the numbers yourself and shape your own story in just a few minutes. Do it your way

A great starting point for your Ligand Pharmaceuticals research is our analysis highlighting 2 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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