Assessing Ligand Pharmaceuticals (LGND) Valuation After Recent Share Price Weakness And Strong 1 Year Return

Event context and recent stock performance

Ligand Pharmaceuticals (LGND) has come into focus after a period in which its shares have moved lower over the past month and past 3 months, while still showing a positive 1 year total return.

At a last close of US$183.83, the company carries a value score of 3, with annual revenue of US$251.233 million and net income of US$48.581 million, supported by positive annual revenue and net income growth.

See our latest analysis for Ligand Pharmaceuticals.

That recent slide in the share price, including a 30 day share price return of a 4.7% decline and a 90 day share price return of an 8.7% decline, contrasts with a strong 1 year total shareholder return of 53.2%. This suggests earlier optimism is cooling rather than building further momentum.

If this kind of move in a single biotech name has your attention, it could be a good moment to see what else is setting up in our screener of 25 healthcare AI stocks.

With a value score of 3, solid revenue and net income, and the shares trading below analyst targets and some intrinsic estimates, the key question is whether Ligand is undervalued today or if the market is already pricing in future growth.

Most Popular Narrative: 24.5% Undervalued

At a last close of $183.83 against a narrative fair value of $243.44, the most followed view frames Ligand Pharmaceuticals as trading at a meaningful discount, with that gap tied directly to detailed assumptions about its future cash generation.

The accelerating pace of R&D outsourcing and drug discovery innovation, along with increased regulatory support for differentiated, high-value products, positions Ligand as a key royalty and platform provider, deepening their pipeline and further supporting future recurring revenue and sustainable earnings growth.

Read the complete narrative.

Curious what kind of revenue mix and profit margins sit behind that fair value, and how far out earnings need to ramp to support it? The narrative leans heavily on recurring royalties, expanding partner pipelines, and a richer earnings profile years from now. The detailed assumptions are all laid out for you, but only if you read them in full.

Result: Fair Value of $243.44 (UNDERVALUED)

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

However, this narrative can still be challenged if concentrated royalty assets underperform or if drug pricing and regulatory shifts compress the rich margins implied in the forecasts.

Find out about the key risks to this Ligand Pharmaceuticals narrative.

Another way to look at valuation

The fair value narrative suggests Ligand is 24.5% undervalued, but the current P/E of 74.5x tells a very different story. It sits well above the estimated fair ratio of 21.1x and the US Pharmaceuticals average of 20.2x. This could indicate meaningful downside risk if sentiment cools. Which signal do you consider more important right now?

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

Build Your Own Ligand Pharmaceuticals Narrative

If you see the numbers differently or simply want to test your own assumptions, you can build a custom view of Ligand in just a few minutes, starting with Do it your way.

A great starting point for your Ligand Pharmaceuticals research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.

Looking for more investment ideas?

If Ligand has sharpened your focus, do not stop here. The screener can surface other opportunities that fit your style before the crowd pays attention.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com