Assessing IDEAYA Biosciences (IDYA) Valuation After Bullish Analyst Reports And Big Pharma Partnerships

IDEAYA Biosciences (IDYA) is back in focus after a cluster of upbeat analyst reports highlighted its precision oncology pipeline and its partnerships with GlaxoSmithKline, Pfizer, and Gilead, drawing fresh attention to the stock.

See our latest analysis for IDEAYA Biosciences.

After a strong run that leaves the 1 year total shareholder return at 61.59% and the 3 year total shareholder return just over double, recent 7 day and 1 day share price weakness sits against a 90 day share price return of 17.47%. This suggests sentiment has cooled slightly in the very short term but remains constructive over a longer window.

If IDEAYA’s story has you looking beyond a single name, this could be a good moment to scan other specialist healthcare stocks that might fit your watchlist next.

With the shares up strongly over 1 and 3 years, yet still trading below the average analyst price target and flagged as undervalued on some models, the key question is whether there is still a buying opportunity here or if the market already prices in future growth?

Price-to-Sales of 14.6x: Is it justified?

On a simple P/S yardstick, IDEAYA trades on 14.6x sales, which screens as expensive versus both peers and an internally assessed fair ratio, despite the recent pullback.

The P/S ratio compares the company’s market value to its revenue, which is a common way to look at early stage or loss making biotech names where earnings are not yet positive. A higher P/S often reflects the market putting a premium on future revenue potential relative to current sales.

For IDEAYA, the current 14.6x P/S is above the peer average of 11.2x and above the wider US biotech industry average of 12.1x. This indicates investors are paying more per dollar of revenue than they are for comparable companies. It also sits far above an estimated fair P/S ratio of 1.8x, a level the market could shift toward if sentiment or growth expectations reset.

Explore the SWS fair ratio for IDEAYA Biosciences

Result: Price-to-Sales of 14.6x (OVERVALUED)

However, you also have to weigh clinical trial setbacks or partnership changes, which could quickly challenge today’s premium P/S ratio and the assumption of continued pipeline progress.

Find out about the key risks to this IDEAYA Biosciences narrative.

Another View: DCF Points the Other Way

While the 14.6x P/S ratio makes IDEAYA look expensive versus peers, our DCF model suggests something very different. At a last close of US$35.84, the shares are indicated as trading about 72% below an estimated fair value of US$128.18, which screens as materially undervalued.

That gap raises a simple question for you as an investor: is the market overpaying on current sales, or underestimating the long term cash generation that the SWS DCF model is implying?

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 IDEAYA Biosciences 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 873 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 IDEAYA Biosciences Narrative

If you see the numbers differently or simply prefer to trust your own work, you can pull the same data, test your assumptions, and Do it your way in just a few minutes.

A great starting point for your IDEAYA Biosciences research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

If IDEAYA is on your radar, do not stop there. Widening your research now with fresh ideas can help you spot opportunities before they feel obvious.

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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