Is MannKind a Hidden Opportunity After Recent Share Price Slide?

• If you are wondering whether MannKind at around $5.59 is a hidden opportunity or a value trap, you are not alone, and that is exactly what we are going to unpack.
• The stock has slipped around 15.3% year to date and 17.8% over the past year, but it is still up 18.9% over 3 years and 98.2% over 5 years, which highlights how sentiment and risk perception have shifted over time.
• Recent attention on MannKind has centered on its inhaled insulin Afrezza and its expanding footprint in pulmonary delivery technologies, which has kept it in the conversation among healthcare investors. In addition, ongoing partnerships and pipeline developments have helped frame the latest price moves as more than just market noise.
• Right now, MannKind scores a 3/6 valuation check, suggesting the market might be partly underestimating it, but it is far from a clear bargain. Next, we will walk through the main valuation lenses investors use, before ending with a more powerful way to think about what MannKind might really be worth.

Find out why MannKind's -17.8% return over the last year is lagging behind its peers.

Approach 1: MannKind Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth today by projecting its future cash flows and then discounting those back to the present. For MannKind, the latest twelve month Free Cash Flow stands at about $24.1 million. This serves as the starting point for a 2 stage Free Cash Flow to Equity model.

Analyst expectations and subsequent extrapolations point to Free Cash Flow rising to roughly $318.8 million by 2035, with interim years such as 2026 and 2029 projected at $79 million and $208 million respectively. Simply Wall St extends analyst estimates beyond the usual 5 year window by tapering growth assumptions over time. This approach is intended to help avoid unrealistically aggressive long term forecasts.

On this basis, the DCF model arrives at an intrinsic value of about $18.23 per share. Compared with the current share price of roughly $5.59, that implies MannKind is trading at around a 69.3% discount to its estimated fair value. This suggests potential upside if these cash flow projections are roughly correct.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests MannKind is undervalued by 69.3%. Track this in your watchlist or portfolio, or discover 930 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 MannKind.

Approach 2: MannKind Price vs Earnings

For a company like MannKind that is now generating positive earnings, the price to earnings (PE) ratio is a useful reality check because it ties the share price directly to the profits that shareholders ultimately care about. In general, faster growing and less risky companies can justify a higher PE, while slower growth or higher uncertainty usually call for a lower, more conservative multiple.

MannKind currently trades on a PE of about 58.7x. That is well above the broader Biotechs industry average of roughly 19.2x, but actually below the 67.5x average of its closer peers. This reflects the market’s mixed view on its growth prospects and risk profile. Simply Wall St’s proprietary Fair Ratio for MannKind, which estimates what a “normal” PE should be after adjusting for its earnings growth outlook, industry, profit margins, market cap and specific risks, comes in at around 25.0x. This Fair Ratio is more informative than a simple peer or industry comparison because it blends these company specific fundamentals rather than assuming all biotechs deserve the same multiple. With MannKind’s actual PE of 58.7x sitting well above the 25.0x Fair Ratio, the stock appears expensive on an earnings multiple basis.

Result: OVERVALUED

PE 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 MannKind Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, an easy tool on Simply Wall St’s Community page that lets you connect your view of MannKind’s story to specific forecasts for its future revenue, earnings and margins, and then to a Fair Value that you can compare to today’s share price to help inform a decision to buy, hold or sell. The platform dynamically updates your Narrative as new news or earnings arrive. For example, a bullish investor might build a Narrative in which Afrezza’s growth, Tyvaso DPI royalties and new inhaled therapies drive strong double digit revenue growth, higher margins and a Fair Value closer to the upper end of analyst targets around $15. A more cautious investor might instead focus on trial setbacks, competition and concentration risk, leading to more modest growth and margins, a Fair Value near the low end of targets around $8, and a very different view on whether MannKind at its current price represents opportunity or risk.

Do you think there's more to the story for MannKind? 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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