Changes in Ionis Pharmaceuticals’ Valuation after 1Q17



A look at Ionis Pharmaceuticals

Ionis Pharmaceuticals (IONS) has been a leading pharmaceutical company in the RNA[1.ribonucleic acid]-targeted therapeutic space for over 26 years. Ionis is focused on developing new drugs for life-threatening diseases, and markets its approved products in collaboration with other pharmaceutical companies.

In 1Q17, Ionis Pharmaceuticals reported EPS (earnings per share) of $0.03 on revenue of $110.3 million, compared with EPS of -$0.52 on revenue of $36.9 million in 1Q16.

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Forward valuation multiples

Generally, the forward PE (price-to-earnings) and EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiples are preferred. However, as Ionis Pharmaceuticals reported very low net income in 1Q17 and a net loss in 1Q16, we’ll look at its forward EV-to-revenue multiple.

As of June 9, 2017, the company is trading at a forward EV-to-revenue multiple of 15.2x, compared with the industry average of 4.7x. Competitors Incyte (INCY), Halozyme Therapeutics (HALO), and Gilead Sciences (GILD) are trading at forward EV-to-revenue multiples of 15.8x, 12.6x, and 4.1x, respectively.

Analyst recommendations

As of June 9, 2017, Ionis’s stock value had risen 131% over the last 12 months. Wall Street analysts estimate that the stock value will fall ~1.3% over the next 12 months. Analysts’ recommendations show a 12-month targeted price of $49.32 per share, compared with $49.98 per share on June 8, 2017. Also, of the 11 analysts tracking Ionis Pharmaceuticals, five analysts recommend “buy,” five analysts recommend “hold,” and one analyst recommends “sell.” The consensus rating for Ionis’s stock is 2.6, which is a moderate “buy” for value investors.

To divest company-specific risks, investors could consider funds such as the PowerShares Dynamic Biotechnology & Genome Portfolio ETF (PBE), which has a 2.5% exposure to Ionis Pharmaceuticals.


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