Is Mirum Pharmaceuticals Running Ahead of Itself After Pipeline Progress News and a 74% Rally?

• Wondering if Mirum Pharmaceuticals is still a bargain, or if the stock is running ahead of itself? You are not alone. Today we are digging deep into what the numbers really say about its value.
• The stock has soared 74.0% year-to-date and is up a tremendous 292.1% over the past three years, signaling there is real excitement around its prospects.
• Recent news highlights major progress in Mirum’s pipeline therapies and expanded regulatory approvals. Both of these developments have caught the attention of investors and analysts. Strategic partnerships and successful clinical developments continue to provide strong momentum behind the recent price move.
• On our value checklist, Mirum scores a solid 4 out of 6 on undervaluation. This may be worth a closer look as we explore standard valuation methods, with something even more insightful in the conclusion.

Mirum Pharmaceuticals delivered 56.8% returns over the last year. See how this stacks up to the rest of the Biotechs industry.

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

The Discounted Cash Flow (DCF) model estimates the present value of a business by forecasting its future cash flows and discounting them back to today’s value. This approach is often valued for biotech companies like Mirum Pharmaceuticals, where future growth and pipeline success are important value drivers.

According to available data, Mirum currently generates Free Cash Flow of $23.4 million. Analysts project growth, with Free Cash Flow expected to reach $321.5 million by 2029 based on available analyst estimates, and further projections for subsequent years that reflect continued growth momentum. Over the next decade, Free Cash Flow is projected to increase significantly, highlighting expectations related to Mirum’s pipeline and commercialization efforts.

Based on this DCF analysis, Mirum’s intrinsic value is calculated at $217.08 per share. When compared to the current market price, this suggests the stock is trading at a 66.3% discount to its estimated fair value and may be considered undervalued at current levels.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Mirum Pharmaceuticals is undervalued by 66.3%. Track this in your watchlist or portfolio, or discover 928 more undervalued stocks based on cash flows.

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

Approach 2: Mirum Pharmaceuticals Price vs Sales

The price-to-sales (P/S) ratio is often considered a robust valuation tool for growth-oriented companies like Mirum Pharmaceuticals, especially when profits may be limited by ongoing investments in research and development. Since biotech companies frequently reinvest heavily for future growth, the P/S multiple offers a clear perspective on how the market values each dollar of revenue, even when bottom-line profits are not yet consistent.

Market expectations and the risks associated with a company’s future growth prospects heavily influence what constitutes a “normal” or “fair” P/S ratio. If investors foresee significant sales expansion and manageable risks, a higher P/S ratio may be justified compared to peers. However, excessive risk or slowing growth would logically warrant a discount in this multiple.

Mirum’s current P/S ratio stands at 8.0x. In comparison, the average for its peers is 6.3x, while the broader biotech industry averages 13.1x. Simply Wall St’s proprietary Fair Ratio for Mirum, which holistically considers the company’s growth prospects, margins, industry positioning and size, is calculated at 6.9x. Unlike simple peer or industry comparisons, the Fair Ratio offers a more nuanced benchmark suited to Mirum’s unique profile.

With Mirum trading at 8.0x versus a Fair Ratio of 6.9x, the stock appears slightly overvalued on this metric, but not excessively so.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1440 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Mirum Pharmaceuticals Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let’s introduce you to Narratives. Narratives are an innovative investment tool that lets you create your own story about a company, combining your personal perspective and expectations with financial data like fair value, future revenue, earnings, and margins.

Each Narrative starts with your view of the company’s prospects and risks, turns that story into a detailed financial forecast, and then translates it into a fair value. This approach brings numbers and beliefs together in one powerful, user-friendly framework. Narratives are available on the Simply Wall St Community page, where millions of investors share their insights and scenarios, making this a straightforward and accessible way to make more informed decisions.

By regularly comparing your Narrative-based fair value to the current price, you can quickly decide when a stock looks attractive to buy or if it is time to consider selling. These Narratives are dynamic. Whenever new information like breaking news or fresh earnings comes in, the numbers update in real time so your investment story always reflects the latest facts.

For example, some Mirum Pharmaceuticals investors see upside to $89.00 based on breakthrough clinical trial readouts, while others are more cautious with a fair value as low as $53.00 if future milestones face delays.

Do you think there's more to the story for Mirum Pharmaceuticals? Head over to our Community to see what others are saying!

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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