Vaxcyte (PCVX): Evaluating Valuation After Larger Net Losses in Latest Earnings Report

Vaxcyte (PCVX) just released its third quarter results, revealing a substantially larger net loss compared to a year ago. Investors are focusing on what this means for the company’s financial momentum.

See our latest analysis for Vaxcyte.

Despite posting an increased quarterly net loss, Vaxcyte’s share price bounced back strongly in recent weeks, with a 52.4% gain over the last 90 days and a 14.0% jump in the past month. However, its one-year total shareholder return sits at minus 44.1%, so momentum has only recently begun shifting after a tough start to the year.

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The sharp rebound in Vaxcyte’s share price follows larger losses and ongoing volatility. Investors are now weighing whether there is still value to unlock or if the recent rally has fully accounted for future growth prospects.

Price-to-Book Ratio of 2.2x: Is it justified?

Vaxcyte trades at a price-to-book (P/B) ratio of 2.2x, which is notably lower than both its peer group average of 16.6x and the broader US Biotechs industry average of 2.4x. This suggests the market is currently assigning a lower valuation to Vaxcyte’s net assets compared to many of its biotech peers.

The price-to-book ratio reflects what investors are willing to pay for each dollar of company net assets. In the biotech sector, where future promise often outweighs current profits, a lower P/B could imply skepticism about future potential, or alternatively, an undervalued opportunity given the sector’s growth orientation and asset-light nature.

Given Vaxcyte’s unprofitable profile but rapid expected revenue growth, the subdued multiple might point to market caution about near-term commercialisation or uncertainty regarding the ability to realise long-term value. Since its P/B is not only below peers but also slightly beneath the industry average, current pricing potentially gives investors more downside protection but also signals the market’s reservations.

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

Result: Preferred multiple of 2.2x (UNDERVALUED)

However, ongoing net losses and market skepticism around near-term commercialization could present challenges to the recent positive momentum in Vaxcyte’s share price.

Find out about the key risks to this Vaxcyte narrative.

Build Your Own Vaxcyte Narrative

As always, if you want to dig deeper or see the story differently, you’re welcome to analyze the numbers firsthand and form your own perspective. You can put it together in 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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