Does Stoke Therapeutics Share Price Rally in 2025 Reflect Its True Value?

• Wondering whether Stoke Therapeutics offers real value at its current price? You are not alone, especially as biotech stocks often grab the spotlight when potential changes are on the horizon.
• Stoke’s stock surged an extraordinary 178.7% year-to-date and is up 151.3% over the last twelve months, even with a recent short-term dip of 3.4% this past week.
• The impressive rally has come in the wake of positive industry developments, ongoing advances in its RNA-targeted therapies, and new partnership announcements that have increased attention from both investors and healthcare experts.
• Despite all this excitement, Stoke Therapeutics currently scores just 0/6 on our valuation checks, suggesting price may not tell the full value story. Let’s break down the common valuation approaches and then reveal an even smarter way to gauge what this company is really worth by the end of this article.

Stoke Therapeutics scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Stoke Therapeutics Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates the intrinsic value of a company by projecting its future cash flows and discounting them back to today’s value. This process helps investors assess what a stock might truly be worth, rather than relying solely on market sentiment or comparable multiples.

For Stoke Therapeutics, the DCF approach uses a 2 Stage Free Cash Flow to Equity model. The company's most recent reported Free Cash Flow stands at $57.5 million. Analysts project challenging years ahead, with only positive annual Free Cash Flow expected by 2029, forecasted at $17.5 million. Beyond the next five years, projections are extrapolated by Simply Wall St and show a gradual lift in cash generation through 2035, but these improvements begin from a period of negative cash flows.

According to these forecasts, the intrinsic fair value of Stoke Therapeutics is $10.71 per share. This discounted value suggests the current stock price is roughly 193.3% above its intrinsic valuation, implying that the shares are significantly overvalued by the market at this time.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Stoke Therapeutics may be overvalued by 193.3%. Discover 853 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Stoke Therapeutics.

Approach 2: Stoke Therapeutics Price vs Earnings

For profitable companies, the Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics. It allows investors to compare a stock's price with its actual profitability, providing a quick sense of whether a company is expensive or cheap relative to its earnings.

It's important to remember that expectations about future growth and the level of risk in a business can both have a major impact on what counts as a “normal” PE ratio. Fast-growing companies or those with unique market positions can justify higher PE multiples. Riskier or slower-growing businesses usually command discounts.

Currently, Stoke Therapeutics trades at a PE ratio of 32.8x. By comparison, the average PE for biotech peers is about 26.3x, and the broader biotech industry average sits at 17.9x. At face value, Stoke’s multiple seems high, but industry and peer averages can miss the nuances of individual company prospects.

Simply Wall St's proprietary “Fair Ratio” digs deeper, incorporating Stoke's unique factors like earnings growth, profit margins, industry specifics, market cap, and risks. For Stoke, the Fair PE Ratio lands at 12.4x. This analytic approach goes beyond one-size-fits-all benchmarks and delivers a truer picture of what Stoke should trade at, given its actual metrics and outlook.

Comparing the Fair PE Ratio of 12.4x to the current PE of 32.8x, Stoke’s shares appear significantly overvalued on this basis.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1394 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Stoke Therapeutics Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your opportunity to tell the story behind the numbers by connecting your personal perspective about Stoke Therapeutics with your assumptions for fair value, future revenue, earnings, and profit margins.

Narratives link a company’s broader story to a specific financial forecast, and from there, directly to a fair value. Instead of just relying on static data points, Narratives let you see the reasoning and forecasts that power investor outlooks. This is all available through a tool used by millions of investors on Simply Wall St’s Community page.

This approach allows you to make better-informed decisions about when to buy or sell by comparing each Narrative’s fair value against the stock’s current price. In addition, Narratives are instantly updated as new information, such as earnings or news, emerges, keeping your decision process current and relevant.

For example, some investors may craft bullish Narratives for Stoke Therapeutics with higher revenue estimates and optimistic growth, while others take a more conservative view with lower fair values. This shows just how diverse opinion can shape valuations in real time.

Do you think there's more to the story for Stoke Therapeutics? Head over to our Community to see what others are saying!

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com