NewAmsterdam Pharma (NasdaqGM:NAMS): Valuation in Focus After New Manufacturing Expansion with Piramal Pharma Solutions

If you’ve been eyeing NewAmsterdam Pharma (NasdaqGM:NAMS), the latest developments could make you pause and reassess next steps. This week, the company unveiled a dedicated oral solid dosage manufacturing suite in partnership with Piramal Pharma Solutions. This multi-million-dollar move is aimed at boosting production efficiency for its investigational fixed dose combination of obicetrapib and ezetimibe. The timing matters, as the facility is built to handle potential high demand if regulatory approval comes through for their drug candidate.

This expansion follows a busy period for NewAmsterdam Pharma. Over the past year, the stock priced in a jump of nearly 49%, with an especially sharp increase in the past 3 months. Other recent highlights include regulatory milestones in Europe and the signing of product supply agreements. Momentum is building, indicating that the market is closely following the company’s progress while taking note of some of the risks involved.

With this year’s gains and the company’s new capacity push, is NewAmsterdam Pharma preparing for an undervalued run, or is the market already factoring in the next phase of growth?

Price-to-Sales Ratio of 44x: Is it justified?

NewAmsterdam Pharma is currently valued at a Price-to-Sales (P/S) ratio of 44, which is significantly higher than both the US Biotechs industry average (9.2x) and the peer average (9.1x). This suggests that the market is pricing in aggressive expectations for future revenue growth compared to its industry.

The P/S ratio measures how much investors are willing to pay for each dollar of sales the company generates. For biotech companies, this metric is relevant because many operate at a loss while investing heavily in research and development. As a result, traditional profit-based multiples are often less meaningful. A higher P/S ratio often reflects anticipated growth, but it also raises the bar for meeting future expectations.

Given this elevated multiple, the implication is that investors are either seeing substantial promise in NewAmsterdam Pharma’s drug pipeline or possibly overestimating its ability to convert that promise into significant sales. The market appears to be placing a premium on future prospects rather than on current fundamentals.

Result: Fair Value of $25 (OVERVALUED)

See our latest analysis for NewAmsterdam Pharma.

However, ongoing net losses and the company’s dependence on regulatory approvals could challenge investor confidence if milestones slip or revenue expectations are not met.

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

Another View: What Does the DCF Model Say?

While the price-to-sales ratio paints one picture, our DCF model offers a very different perspective and suggests the stock may actually be undervalued. Could the market be missing something, or are future risks being overlooked?

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 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 want to take a closer look or build your own perspective, you can easily craft your own narrative with just a few clicks, and do it your way.

A great starting point for your NewAmsterdam Pharma research is our analysis highlighting 3 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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