A Look at Vaxcyte’s (PCVX) Valuation Following $1 Billion Thermo Fisher Manufacturing Deal

Vaxcyte, Inc. has just inked a long-term partnership with Thermo Fisher Scientific to build out domestic fill-finish manufacturing for its next-generation pneumococcal conjugate vaccines. This $1 billion deal increases U.S. commercial capacity and strengthens supply chain reliability for Vaxcyte’s core pipeline.

See our latest analysis for Vaxcyte.

Vaxcyte’s newly announced Thermo Fisher partnership comes after a year of momentum-building moves, even as the company’s 1-year total shareholder return slipped just under 1%. While recent news has generated plenty of attention, the stock’s longer-term total returns suggest investors remain cautiously optimistic about its potential.

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With analyst price targets significantly higher than current levels and strong buy ratings, investors may wonder whether the market is underestimating Vaxcyte’s future growth. Alternatively, it is possible that the recent excitement has already been fully incorporated into the stock’s price, potentially limiting further upside.

Price-to-Book of 1.7x: Is it justified?

Vaxcyte’s current price-to-book ratio stands at 1.7x, below both US Biotech industry and peer group averages. This hints at relative undervaluation even after its recent news-driven run-up to $40.13 per share.

The price-to-book multiple compares a company’s market value to its book (net asset) value, a common approach for valuing biotech firms that are pre-revenue or unprofitable. This ratio can reveal whether the market expects future success or is discounting the company’s prospects.

For Vaxcyte, the 1.7x price-to-book is notably cheaper than the US Biotech industry average of 2.4x as well as the peer group average of 6.2x. This sizable discount implies the market is either skeptical of future earnings power or is not pricing in the same pipeline potential that peers enjoy. If the market sentiment shifts or catalysts play out, there could be meaningful upside as multiples move closer to industry norms.

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

Result: Price-to-Book of 1.7x (UNDERVALUED)

However, Vaxcyte is still pre-revenue and continues to post large net losses. This could weigh on sentiment if progress stalls or funding needs increase.

Find out about the key risks to this Vaxcyte narrative.

Build Your Own Vaxcyte Narrative

If you have a different view or want to dive deeper into the numbers, you can explore the data and craft your own take in just a few minutes. Do it your way.

A great starting point for your Vaxcyte research is our analysis highlighting 1 key reward 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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