Zymeworks (ZYME): Reassessing Valuation After FDA Zanidatamab Approval and a Sharp Share Price Rally

The recent FDA approval of zanidatamab for HER2 positive biliary tract cancer has pushed Zymeworks (ZYME) into the spotlight. Upcoming conference presentations will give investors more to consider regarding its pipeline and strategy.

See our latest analysis for Zymeworks.

That backdrop helps explain why Zymeworks' share price return has surged, with an 80.58 percent year to date gain and a 62.15 percent 1 month move. Its 3 year total shareholder return of 297.76 percent signals strong, building momentum despite a still negative 5 year total shareholder return.

If Zymeworks' run has caught your eye, this could be a smart time to explore other innovative healthcare names through healthcare stocks and see what else fits your watchlist.

With shares now trading near 30 percent below consensus targets but up sharply on FDA news, is Zymeworks still mispriced by a market that may be underestimating its pipeline, or are investors already paying up for years of future growth?

Most Popular Narrative Narrative: 23% Undervalued

With Zymeworks last closing at 26.69 dollars against a narrative fair value of 34.50 dollars, the story hinges on aggressive royalty driven growth.

The analysts have a consensus price target of 21.05 dollars for Zymeworks based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of 30.0 dollars, and the most bearish reporting a price target of just 12.0 dollars.

Read the complete narrative.

Curious how a capital light royalty engine, sharp earnings inflection, and a punchy future profit multiple combine into that valuation jump? The full narrative unpacks the exact growth path, margin lift, and time frame behind this price tag without holding anything back.

Result: Fair Value of $34.5 (UNDERVALUED)

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

However, investors still face meaningful risk if key zanidatamab milestones slip or early stage ADC assets stumble, which could delay royalty ramps and pressure valuation.

Find out about the key risks to this Zymeworks narrative.

Another Way to Look at Valuation

While the narrative fair value suggests upside, our SWS DCF model paints a starkly different picture, flagging Zymeworks as overvalued with a fair value estimate of just 5.30 dollars compared with a 26.69 dollar share price. Is the market right to look past the cash flow math, or is sentiment running ahead of fundamentals?

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

Build Your Own Zymeworks Narrative

If this view does not quite match your own or you would rather dig into the numbers yourself, you can build a personalized thesis in just a few minutes, Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Zymeworks.

Ready for more investment ideas?

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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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