A look at Royalty Pharma's (RPRX) valuation after stronger 2025 outlook, Q3 results, and ongoing share buybacks

Royalty Pharma (RPRX) grabbed investor attention after releasing an improved full-year 2025 outlook, which highlights stronger expected growth. Third quarter results showed higher revenue and continued share buybacks, signaling management’s confidence and a focus on shareholder returns.

See our latest analysis for Royalty Pharma.

Following these updates, Royalty Pharma’s share price has posted an impressive 51.8% gain since the start of the year, as investors responded to renewed growth guidance and a series of sizable share buybacks. The 12-month total shareholder return stands even higher at 56.2%, showing momentum is firmly on the upswing both in the short term and long term.

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With shares already soaring, investors now face a pivotal question: is Royalty Pharma still undervalued considering its raised guidance and buybacks, or has the market fully priced in the company’s promising growth trajectory?

Most Popular Narrative: 11.2% Undervalued

Royalty Pharma's most widely followed narrative assigns a fair value of $44.10, above the last close at $39.16. The valuation hinges on revenue growth prospects, robust new royalty deals, and margin dynamics shaping future returns for shareholders.

"Strategic reinvestment of large, stable cash flows into new and increasingly innovative royalty acquisitions, enhanced by improved data-driven diligence and risk management, allows Royalty Pharma to continually expand its portfolio with attractive economics, increasing operating leverage and net margins over time."

Read the complete narrative.

Curious about the key drivers fueling this bullish valuation? It's not just about new deals or sector trends. The narrative relies on a bold set of assumptions covering multi-year growth rates, shifting profit margins, and aggressive capital redeployment. See what underpins this price. The full story is just one click away.

Result: Fair Value of $44.10 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing legal disputes and intensifying competition in drug royalties could challenge Royalty Pharma’s growth outlook. As a result, this bullish narrative remains far from guaranteed.

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

Build Your Own Royalty Pharma Narrative

If you want to dig into the numbers yourself or think a different perspective is worth exploring, you can craft your own custom narrative in just a few minutes. Do it your way

A great starting point for your Royalty 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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