Assessing Zealand Pharma (CPSE:ZEAL) Valuation After Prolonged Share Price Weakness

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Zealand Pharma (CPSE:ZEAL) has drawn attention after a period of mixed share performance, with a one-month return of a 12% decline and a past three-month return of an 8% decline.

Over the past year, the stock shows a 45% decline in total return, even though the three-year and five-year total returns are positive. This contrast may prompt you to compare recent market sentiment with the company’s longer-term track record.

See our latest analysis for Zealand Pharma.

Recent share price moves have been weak overall, with a 1 month share price return of 12% decline and a year to date share price return of 7.41% decline, while the 3 year and 5 year total shareholder returns remain strongly positive.

If Zealand Pharma’s recent swings have you reassessing your ideas in healthcare, it could be a good moment to scan other healthcare stocks that fit your own criteria.

With Zealand Pharma shares down 45% over the past year yet still showing strong 3 and 5 year total returns, you might ask yourself whether this weakness represents an opportunity to invest or whether the market is already fully pricing in future growth.

With Zealand Pharma last closing at DKK426 and the most followed narrative pointing to fair value around DKK745.93, the gap between price and narrative expectations is wide enough to make the underlying assumptions worth a closer look.

The alliance with Roche for petrelintide significantly derisks commercialization and broadens access to manufacturing and distribution scale, positioning Zealand to capitalize on the global surge in obesity and metabolic disorder prevalence, a trend expected to underpin sustained long-term demand and topline expansion.

Read the complete narrative.

Curious what has to happen in obesity drugs, margins, and future earnings for that fair value to stack up? The narrative leans on aggressive shifts in revenue direction, big swings in profitability, and a much higher future earnings multiple than today. The numbers behind that story are anything but conservative.

Result: Fair Value of DKK745.93 (UNDERVALUED)

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

However, this hinges on clinical success and partner follow through, with trial setbacks or weaker than expected milestone and royalty streams both capable of upending the current upside story.

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

If you see the numbers differently or want to stress test your own assumptions, you can pull up the same data and build a narrative that fits your view, then Do it your way.

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

If Zealand Pharma is on your watchlist, do not stop there. Widening your search now could reveal other ideas that fit your style just as well.

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.

Companies discussed in this article include ZEAL.CO.

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