Viridian Therapeutics (VRDN): Revisiting Valuation After Analyst Upgrades and Robust Revenue Growth

Viridian Therapeutics (VRDN) caught investors’ attention after both Truist Financial and TD Cowen initiated Buy ratings. This coincided with the company’s announcement of strong quarterly revenue growth and progress toward profitability.

See our latest analysis for Viridian Therapeutics.

Viridian Therapeutics has seen real momentum build this year. Its 30-day share price return stands at 37.85%, while the total return for shareholders over the past twelve months reached 47.19%. Recent upbeat analyst calls and robust revenue growth have contributed to that upswing, indicating that investors are beginning to factor in brighter prospects.

If the buzz around Viridian's turnaround has you curious, now is an ideal time to see what other healthcare innovators are making waves—explore See the full list for free.

But with Viridian stock still trading below analyst price targets and boasting sizeable gains this year, the real question is whether the recent rally leaves room for more upside or if all the good news is already reflected in the price.

Price-to-Sales of 42.8x: Is it justified?

Viridian Therapeutics currently trades at a price-to-sales ratio of 42.8x, which puts it at a significant premium compared to both its industry and peers. With the last close at $31.72, the stock’s valuation signals that the market is pricing in aggressive future growth or a high degree of investor optimism.

The price-to-sales (P/S) ratio measures how much investors are willing to pay for each dollar of revenue. This is especially relevant for biotechnology firms that may not yet be profitable but show strong growth potential. In Viridian’s case, this lofty multiple means expectations are set for continued expansion, but it also raises questions about whether the current growth trajectory and market opportunity justify such a price tag.

Looking closer, the US Biotechs industry averages a P/S ratio of just 13.1x, while peers come in at 17.8x. Viridian’s 42.8x is not only dramatically higher than these benchmarks but is also well above the estimated fair price-to-sales ratio of 0.1x. Such a gap suggests the stock could face adjustment if market sentiment cools. However, it also highlights just how much upside investors expect from the pipeline and future launches.

Explore the SWS fair ratio for Viridian Therapeutics

Result: Price-to-Sales of 42.8x (OVERVALUED)

However, risks remain. Viridian's heavy reliance on successful pipeline trials and persistent operating losses could quickly shift investor sentiment if setbacks occur.

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

Another View: Discounted Cash Flow Flips the Script

While the market assigns Viridian an expensive price tag based on sales, our DCF model sees things differently. The SWS DCF model estimates Viridian's fair value at $295.93, which makes the current price of $31.72 appear dramatically undervalued. This raises a key question: what does the market know or miss about Viridian’s future?

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

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Viridian 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 927 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 Viridian Therapeutics Narrative

If you have a different perspective or want to dig into the numbers yourself, it only takes a few minutes to craft your own story. Do it your way

A great starting point for your Viridian Therapeutics research is our analysis highlighting 2 key rewards and 1 important warning sign 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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