AnaptysBio (ANAB) has completed the spin off of First Tracks Biotherapeutics and now operates as a royalty focused company centered on collaborations with GSK and Vanda, alongside fresh leadership appointments.

The latest spin off, leadership changes and focus on royalty income come after a powerful multi year run, with the share price up 40.5% year to date and 1 year total shareholder return above 7x. However, the 7 day share price return of 8.9% and 30 day share price return of 7% indicate some momentum cooling after recent gains.

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With AnaptysBio now trading at US$63.15, sitting at a sizeable discount to analyst targets and an internal value estimate, the real question is whether the recent pullback leaves upside on the table or if the market is already taking future royalty growth into account.

Preferred Price-to-Sales of 7.9x: Is it justified?

AnaptysBio is currently valued at a P/S of 7.9x, which looks low next to peers yet higher than an internally estimated fair level for the stock.

The P/S multiple compares the company’s market value to its revenue and is often used when a company is still loss making, as is the case here. For AnaptysBio, this lens is particularly relevant because the new royalty focused model leans heavily on future revenue streams rather than current profitability.

On one side, AnaptysBio screens as good value, with its 7.9x P/S sitting well below the peer average of 27.6x and the broader US Biotechs average of 10.9x. This suggests the stock is not priced as aggressively as many royalty and biotech peers. On the other side, the same 7.9x level is above an estimated fair P/S of 4.4x. This implies the market is already assigning a premium to the revenue outlook that could compress if expectations shift toward that fair ratio.

Result: Price-to-Sales of 7.9x (ABOUT RIGHT)

However, investors still need to weigh clinical and regulatory setbacks across the pipeline, along with ongoing net losses of US$26.787m, which could pressure sentiment.

Another view: DCF points to a very different story

While the current 7.9x P/S suggests AnaptysBio is roughly in line with what the market is willing to pay for revenue today, the SWS DCF model points to a very different picture. On that math, the stock at $63.15 sits far below an internal future cash flow value of $304.84, which implies a wide gap between what cash flows might support and where the market is pricing the shares. The question is whether that gap reflects genuine upside potential or simply highlights how uncertain long term forecasts can be for a clinical stage biotech.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out AnaptysBio 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 50 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

With sentiment clearly split between potential reward and very real risks, this is a good time to move quickly: review the data for yourself and weigh both sides using 2 key rewards and 2 important warning signs

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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.