Should Ligand Pharmaceuticals’ (LGND) Surging Earnings and Raised Outlook Prompt Investors to Reassess Their Strategy?

• Ligand Pharmaceuticals reported third quarter 2025 results earlier this month, showing revenue of US$115.46 million and net income of US$117.27 million, compared to revenue of US$51.81 million and a net loss of US$7.17 million a year ago.
• The company also raised its full-year 2025 revenue and royalty guidance, reflecting improved business momentum and a stronger outlook for its underlying royalty and contract revenue streams.
• We’ll examine how this substantial earnings growth and revised outlook may impact Ligand Pharmaceuticals’ long-term investment narrative and business model.

Find companies with promising cash flow potential yet trading below their fair value.

Ligand Pharmaceuticals Investment Narrative Recap

To be a shareholder in Ligand Pharmaceuticals, you need to believe in the company's ability to consistently generate high-margin royalty revenues from a growing portfolio of partnered drugs, despite pressures from drug pricing and regulatory changes. The strong third-quarter results and raised guidance support the company’s short-term earnings momentum, but do not materially reduce the primary risk of over-reliance on a handful of royalty assets, where unexpected partner or regulatory setbacks could disrupt results.

Of all recent developments, Ligand’s raised full-year 2025 revenue and royalty guidance stands out as the most relevant to the company’s long-term growth narrative. This update reinforces confidence in their royalty streams, reflecting strong performance from commercialized assets, and serves as a near-term catalyst as key partnered products appear to be tracking ahead of expectations.

However, investors should also be aware that, despite impressive short-term figures, the company’s concentrated royalty base remains a vulnerability if challenges arise in one or more core drugs...

Read the full narrative on Ligand Pharmaceuticals (it's free!)

Ligand Pharmaceuticals' outlook forecasts $315.6 million in revenue and $121.1 million in earnings by 2028. This scenario assumes 18.9% annual revenue growth and a $197 million increase in earnings from the current level of -$75.9 million.

Uncover how Ligand Pharmaceuticals' forecasts yield a $206.25 fair value, in line with its current price.

Exploring Other Perspectives

Fair value estimates from three members of the Simply Wall St Community range from US$38.77 to US$288.68 per share, reflecting wide disagreement. You may want to consider how Ligand’s reliance on a few top partners could shape its ability to meet ambitious growth targets, especially as market conditions evolve.

Explore 3 other fair value estimates on Ligand Pharmaceuticals - why the stock might be worth less than half the current price!

Build Your Own Ligand Pharmaceuticals Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• 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.
• Our free Ligand Pharmaceuticals research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Ligand Pharmaceuticals' overall financial health at a glance.

Ready For A Different Approach?

Markets shift fast. These stocks won't stay hidden for long. Get the list while it matters:

• We've found 18 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.
• AI is about to change healthcare. These 31 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early.
• The best AI stocks today may lie beyond giants like Nvidia and Microsoft. Find the next big opportunity with these 27 smaller AI-focused companies with strong growth potential through early-stage innovation in machine learning, automation, and data intelligence that could fund your retirement.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com