Trevi Therapeutics (TRVI): Assessing Valuation as Analyst Coverage Highlights Haduvio’s Potential in Chronic Cough Market

What’s Behind the Buzz With Trevi Therapeutics?

Trevi Therapeutics (TRVI) is in the spotlight this week after Morgan Stanley initiated coverage, calling attention to the company’s lead drug candidate, Haduvio, for chronic cough. The move by a major investment bank has prompted many investors to sit up and pay closer attention, especially given recent big pharma partnerships in the chronic cough space. With Haduvio positioned as a potential solution for an underserved market, there is growing speculation about what this attention means for both the company’s future and its stock price.

Trevi’s shares have been anything but quiet over the past year. The stock has soared nearly 145% in the past twelve months, with momentum accelerating—up 30% in the past three months and nearly 9% in just the past month. This fast pace reflects anticipation around Haduvio and the possibility of Trevi attracting significant investment or partnership interest. Still, annual revenue and income figures remain challenging, underscoring the importance of pipeline progress for long-term performance.

After such a rapid rise, the key question is whether Trevi shares offer a compelling entry point for investors, or if the prospect of future growth is already baked into the current price.

Price-to-Book of 5.1x: Is it justified?

By traditional valuation methods, Trevi Therapeutics appears expensive, trading at a price-to-book ratio of 5.1 times compared to the US Pharmaceuticals industry average of just 2.1 times. This multiple suggests the market assigns a significant premium to the company relative to its net assets.

The price-to-book ratio evaluates a company's market value versus its book value. It is often used for biotech and pharmaceutical firms when profits are not yet realized. This ratio serves as a common benchmark for understanding investor confidence in a company's future pipeline and assets.

This higher ratio could indicate that the market is pricing in considerable growth expectations or potential milestones, even before revenue materializes. Investors should be mindful that Trevi's valuation today is materially higher than its peers on this metric, despite a lack of near-term profitability or sales.

Result: Fair Value of $8.25 (OVERVALUED)

See our latest analysis for Trevi Therapeutics.

However, lingering concerns include Trevi's lack of current revenue and continued net losses. These factors could weigh on sentiment if pipeline progress stalls.

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

Another View: No Discounted Cash Flow Verdict

Looking from a different angle, our DCF model could not be applied due to limited cash flow data. As a result, it cannot provide a second opinion on Trevi's valuation. Does this lack of support strengthen doubts about the current premium?

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

Stay updated when valuation signals shift by adding Trevi Therapeutics to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Trevi Therapeutics Narrative

If you have a different perspective or prefer independent analysis, you can explore the numbers and form your own view in just a few minutes. Do it your way

A great starting point for your Trevi Therapeutics research is our analysis highlighting 3 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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