Summit Therapeutics (SMMT) Valuation Check After Positive Phase 3 Lung Cancer Data for Ivonescimab

Summit Therapeutics (SMMT) is back in the spotlight after positive phase 3 data for its lead drug ivonescimab in non small cell lung cancer, which is sharpening focus on the stock’s long term setup.

See our latest analysis for Summit Therapeutics.

The latest phase 3 win comes after a huge multi year run, with a three year total shareholder return of 448.62 percent. However, a modest 1 year total shareholder return of negative 4.42 percent suggests momentum has cooled near 17.94 dollars as investors reassess risk and execution.

If you are weighing Summit’s risk reward profile, it can also be worth scanning other oncology names using our curated healthcare stocks to see what else fits your strategy.

With phase 3 success, a long patent runway to 2039, and a share price well below analyst targets, is Summit’s recent pullback a mispriced entry into a future oncology leader, or is the market already discounting peak ivonescimab upside?

Discounted Cash Flow Suggests Deep Upside, but With Big Assumptions

Our DCF model estimates a fair value of 157.02 dollars per share for Summit Therapeutics, implying the stock at 17.94 dollars trades at an 88.6 percent discount.

The SWS DCF model projects Summit’s future cash flows over many years and then discounts them back to today using a required rate of return. This aims to capture the long term value of a high growth biotech that is not yet profitable.

For Summit, this framework leans heavily on the prospect of rapid revenue expansion, with forecasts calling for revenue growth of around 77 percent a year, while accepting that near term earnings stay negative as the company funds development and commercialization of ivonescimab.

Such a profile can make DCF particularly sensitive, because small changes in growth, margins, or commercialization timing can swing the theoretical value significantly when current revenue is effectively zero and losses are still widening.

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

Result: DCF Fair value of $157.02 (UNDERVALUED)

However, setbacks in ivonescimab’s commercialization, or further share price volatility as losses persist, could quickly challenge today’s optimistic long term valuation narrative.

Find out about the key risks to this Summit Therapeutics narrative.

Another Lens, Using Price to Book

While the SWS DCF model flags Summit as deeply undervalued, its 72 times price to book ratio tells a very different story compared to peers at 11.4 times and the wider US biotech industry at 2.7 times. This raises the question of whether expectations have already run too far ahead.

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

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Summit Therapeutics 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 909 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 Summit Therapeutics Narrative

If you see things differently or want to stress test the assumptions with your own work, you can build a full narrative in minutes: Do it your way.

A great starting point for your Summit Therapeutics 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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