A Fresh Look at Madrigal Pharmaceuticals (MDGL) Valuation Following New Rezdiffra Data and Earnings Update

Madrigal Pharmaceuticals (MDGL) drew focus this week as it presented new data on Rezdiffra, the first approved MASH treatment, at a leading liver disease conference. Investors are watching closely because of the significance for patients with advanced liver disease.

See our latest analysis for Madrigal Pharmaceuticals.

Madrigal Pharmaceuticals has been building real momentum, catching investor attention with both new clinical data for Rezdiffra and a recent earnings update. The stock has climbed sharply, posting a 41.5% share price return over the past 90 days. It has also delivered a 39.5% total shareholder return over the last 12 months, underscoring the company’s growth story as positive sentiment around its market potential builds.

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With shares surging and major clinical progress in the spotlight, the question now is whether Madrigal’s future upside is already reflected in today’s price or if there is still room for a buying opportunity.

Most Popular Narrative: 8.7% Undervalued

With Madrigal Pharmaceuticals last closing at $489.26, the most widely followed narrative places fair value slightly higher at $535.71, using a discount rate of 7.02%. This view signals a moderate undervaluation, driven by high growth optimism and forward-looking profitability projections which may hold key implications for investors.

The rapid uptake and long-term patent protection of Rezdiffra, supported by a new U.S. patent that extends exclusivity to 2045, provides decades of protected revenue opportunity. This increases the likelihood of sustained top-line growth and supports margin expansion due to extended pricing power.

Read the complete narrative.

What is fueling this premium? The narrative hints at blockbuster earnings growth ahead and margin expansion that could reshape expectations for biotech valuations. Want to know the ambitious quantitative assumptions powering this number? The full narrative reveals the financial leap and analyst consensus driving this upbeat outlook.

Result: Fair Value of $535.71 (UNDERVALUED)

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

However, significant risks remain, such as growing competition and heavy reliance on a single lead drug, which could quickly change the company’s growth outlook.

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

Another View: Discounted Cash Flow Signals Deeper Undervaluation

For a different angle, our DCF model estimates Madrigal’s fair value at a much higher $2,665.14 per share, significantly above the current price. This suggests the market could be missing substantial long-term potential. However, does the cash flow outlook present too optimistic a picture, or is the real opportunity still ahead?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own Madrigal Pharmaceuticals Narrative

If you want a different answer or prefer your own analysis, dive into the data and craft your perspective in just a few minutes. Do it your way

A great starting point for your Madrigal Pharmaceuticals research is our analysis highlighting 2 key rewards and 1 important warning sign 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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