NewAmsterdam Pharma (NAMS) On EU Backing Is The Pullback Leaving Shares Mispriced

NewAmsterdam Pharma (NAMS) is back in focus after regulators in Europe issued a positive opinion on Ubeslo and Evlarco, two obicetrapib based treatments for primary hypercholesterolemia and mixed dyslipidemia.

See our latest analysis for NewAmsterdam Pharma.

Despite the positive regulatory update, NewAmsterdam Pharma’s share price has been under pressure recently. The 30 day share price return is down 20.21% and the year to date share price return is down 21.05%, while the 1 year total shareholder return is 30.59% and the 3 year total shareholder return is around 2.6x.

If this kind of regulatory milestone has you looking beyond a single biotech, it could be a good time to seek out other healthcare companies using the 41 healthcare AI stocks

NewAmsterdam Pharma now trades at a steep discount to both analyst targets and intrinsic value estimates after the recent pullback. Is this the market taking a cautious view on execution risk, or an overreaction that misprices the stock?

DCF valuation suggests a wide gap between price and fair value for NewAmsterdam Pharma

On Simply Wall St’s DCF model, NewAmsterdam Pharma has an estimated future cash flow value of $163.71 per share, compared with the latest close at $27.79. That points to a very large implied discount, before even considering the recent pullback.

The SWS DCF model projects NewAmsterdam Pharma’s future cash flows over time and then discounts those back to today using a required rate of return. It is a cash flow based approach, so it focuses on what the business could generate for shareholders rather than current accounting earnings.

For a late stage biopharmaceutical company that is still loss making, this type of framework is a common way to frame valuation. NewAmsterdam Pharma reported revenue of $22.565m and a net loss of $212.733m, which means traditional profit based multiples are less informative at this stage of its lifecycle.

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

Result: DCF Fair value of $163.71 (UNDERVALUED)

However, there are still clear risks for NewAmsterdam Pharma, including the ongoing net loss of $212.733m and uncertainty around the progress of future trials and commercialization.

Find out about the key risks to this NewAmsterdam Pharma narrative.

Another view on NewAmsterdam Pharma’s valuation

The earlier SWS DCF model suggests NewAmsterdam Pharma trades at a deep discount to its estimated future cash flow value. On a different measure, the company’s P/B ratio of 4.9x looks expensive compared with the US Biotechs industry average of 2.4x, although cheaper than a 6.5x peer average. Which signal do you treat as more important?

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out NewAmsterdam Pharma 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 55 high quality undervalued stocks. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

Next Steps

After weighing the mix of cautious signals and optimism around NewAmsterdam Pharma, it makes sense to move quickly and check the data for yourself. To see what those potential upsides look like in detail, take a closer look at the 3 key rewards

Looking for more investment ideas beyond NewAmsterdam Pharma?

If NewAmsterdam Pharma has sharpened your focus on opportunity and risk, do not stop here. Use the Simply Wall St screener tools to compare other stocks on your own terms.

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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