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Here’s What Verastem’s Valuation Trend Indicates

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Analyst recommendations

Of the seven analysts covering Verastem (VSTM) in September, two have given the stock a “strong buy” rating, and five have given it a “buy.” The mean rating for Verastem stock is 1.71 with a target price of $15.57, implying an upside potential of 111.3% over its closing price of $7.37 on September 26.

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Peer ratings

In comparison, its peers Bristol-Myers Squibb (BMY), Merck & Co. (MRK), and Pfizer (PFE) have mean ratings of 2.5, 2.05, and 2.76, respectively. Their target prices are $59.56, $71.62, and $41.80, respectively.

Valuation metrics

Verastem stock rose from $2.92 on January 8 to $9.97 on August 30. Then it corrected to $7.30 in September.

Verastem’s market capitalization is $542.38 million, and its enterprise-value-to-revenue ratio is 38.24x. Its price-to-sales ratio is 54.24x, and its price-to-book ratio is 4.27x.

Its current ratio, a metric of how effectively a company can meet its short-term obligations, stands at 7.70x. In comparison, the current ratios of Bristol-Myers Squibb (BMY), Merck & Co. (MRK), and Pfizer (PFE) are 1.40x, 1.30x, and 1.20x, respectively. That indicates that Verastem is in a better position to satisfy its short-term obligations than its peers.

Verastem’s long-term debt-to-equity ratio stands at 0.19x. In comparison, the long-term debt-to-equity ratios for Bristol-Myers Squibb (BMY), Merck & Co. (MRK), and Pfizer (PFE) are 0.46x, 0.61x, and 0.41x, respectively. That shows that Verastem has a lower leverage than its peers.

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