A Look At InnoCare Pharma (SEHK:9969) Valuation As Dermatology Trials For Soficitinib Progress

InnoCare Pharma (SEHK:9969) has drawn fresh investor attention after dosing the first patient in a Phase II/III trial of TYK2 inhibitor soficitinib for chronic spontaneous urticaria, alongside progress across multiple late stage dermatology programs.

See our latest analysis for InnoCare Pharma.

The new dermatology trial news comes after a mixed price patch, with a 7.71% 1 month share price return and a 1 year total shareholder return of 63.92%, even though the 90 day share price return shows a 13.17% decline.

If this dermatology momentum has you checking the wider healthcare pipeline, it could be worth scanning our screener of 111 healthcare AI stocks as potential next ideas.

With TYK2 trials advancing and the shares trading at a sizeable discount to analyst targets and intrinsic value estimates, the key question is whether InnoCare is still undervalued or whether the market is already pricing in future growth.

Most Popular Narrative: 36.5% Undervalued

With InnoCare Pharma last closing at HK$12.72 against a narrative fair value of HK$20.04, the current price sits well below that modeled estimate.

The company has a strong pipeline with numerous drugs in late stage development, including tafasitamab, zurletrectinib, and others, expecting approvals and launches in the next few years, which could significantly bolster future revenues.

Read the complete narrative.

Want to see what kind of revenue ramp and margin shift that pipeline is assumed to deliver? The projections behind this fair value rely on ambitious growth and a premium future earnings multiple that is far from conservative.

Result: Fair Value of HK$20.04 (UNDERVALUED)

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

However, this depends on heavy R&D spending translating into successful launches, while rising competition in BTK, BCL2 and TYK2 therapies could limit pricing power.

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

Another View: Rich Sales Multiple Keeps Expectations High

That 36.5% narrative discount to fair value sits alongside a very different signal from the P/S ratio. InnoCare trades at 13.4x sales, above its own fair ratio of 10.3x and also higher than peers at 11.8x. This suggests there may be less room for error if the growth story wobbles.

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

Next Steps

Balancing that cautious tone with the upside narrative, it makes sense to review the numbers yourself and decide quickly what really matters here, including 4 key rewards and 1 important warning sign.

Looking for more investment ideas?

If InnoCare has you thinking harder about where to put your next dollar, it makes sense to widen the net and compare it with other focused opportunities.

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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