A Look at NewAmsterdam Pharma (NasdaqGM:NAMS) Valuation Following Q3 Results and Obicetrapib Regulatory Progress

NewAmsterdam Pharma (NasdaqGM:NAMS) released its third-quarter earnings, reporting a substantial operating loss and weak sales. Still, investors are keeping a close eye on pipeline progress and new regulatory milestones for obicetrapib.

See our latest analysis for NewAmsterdam Pharma.

After the third-quarter earnings release and key updates on obicetrapib's regulatory progress, NewAmsterdam Pharma’s share price has surged, with a 55.9% return over the past three months and a 58.5% total shareholder return over the past year. Recent momentum is being fueled by optimism around pivotal clinical milestones and the company’s expanding European partnership, even as financial risks remain.

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With shares surging on clinical and regulatory progress, is NewAmsterdam Pharma still undervalued after this swift rally, or has the market already priced in its pipeline and future growth prospects?

Price-to-Book of 6x: Is it justified?

NewAmsterdam Pharma currently trades at a price-to-book ratio of 6x, which places its valuation significantly above both the industry and peer averages based on the last close of $38.97.

The price-to-book ratio compares a company’s market value to its book value. This metric is a useful measure for asset-heavy sectors like biotech. A higher ratio typically suggests strong market confidence in future growth or asset appreciation, but can also indicate shares are expensive relative to book value.

In NewAmsterdam Pharma’s case, this 6x multiple is notably steeper than the US Biotechs industry average of 2.5x and also higher than its direct peer group at 5.7x. This signals investors are paying a premium well above typical industry benchmarks. This may imply heightened expectations for future performance, but it also raises questions on whether that premium is supported by fundamentals.

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

Result: Price-to-Book of 6x (OVERVALUED)

However, persistent operating losses and lofty expectations for regulatory outcomes could quickly challenge the bullish momentum that is driving shares higher.

Find out about the key risks to this NewAmsterdam Pharma narrative.

Another View: Discounted Cash Flow Suggests Undervaluation

While NewAmsterdam Pharma’s shares appear expensive based on the price-to-book ratio, our SWS DCF model provides a different perspective. It indicates that the stock may actually be undervalued, trading at $38.97, which is 43.5% below our estimate of fair value at $69.01. Could the market be underestimating the company’s long-term growth potential?

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

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out NewAmsterdam Pharma for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 864 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own NewAmsterdam Pharma Narrative

If you have a different perspective or want to dive deeper into the numbers, crafting your own take is quick and simple. Do it your way.

A great starting point for your NewAmsterdam Pharma research is our analysis highlighting 2 key rewards and 2 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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