AnaptysBio (ANAB) has drawn fresh attention after reporting a fourth quarter earnings swing to net income of US$49.61 million, supported by collaboration revenues and milestone payments tied to cancer drug Jemperli.

The strong earnings swing and Jemperli related revenues arrive after a sharp rerating in the shares. The current US$55.41 price follows a 24.49% 90 day share price return and a 1 year total shareholder return of 239.11%, suggesting momentum has been building despite a recent 3.26% one day pullback.

If this kind of biotech driven move has your attention, it could be a good moment to see what else is available through our screener of 32 healthcare AI stocks.

With analysts lifting price targets and the share price already up strongly over the past year, the key question now is whether AnaptysBio still trades at a discount or if the market is already pricing in future growth.

Price-to-Sales of 6.8x: Is it justified?

On the numbers, AnaptysBio trades on a P/S of 6.8x at the last close of $55.41, which screens as mixed value depending on what you compare it to.

The P/S ratio compares the company’s market value to its revenue and is a common way to look at early stage or unprofitable biotech names where earnings are not yet a guide. In AnaptysBio’s case, the P/S of 6.8x sits below both the peer average of 8.5x and the broader US Biotechs industry average of 12x. This points to a lower price tag per dollar of revenue than many sector peers.

However, that same 6.8x is described as expensive relative to an estimated fair P/S of 4.3x, a level the market could shift toward if sentiment or revenue expectations cool. So there are two readings at once: cheaper than much of the industry on one side, but at a premium to the fair ratio estimate on the other. Which of those matters more will depend on how you view the forecast revenue growth of 19.6% per year and the fact that the company is still unprofitable and is forecast to remain so over the next 3 years.

On balance, the current P/S looks low against sector averages but high versus the modelled fair ratio, a tension that gives investors a clear valuation line in the sand to watch if growth or news flow shift.

Result: Price-to-Sales of 6.8x (ABOUT RIGHT)

However, there are still real pressure points here, including AnaptysBio’s US$13.23 million net loss and the risk around clinical and collaboration milestones not landing as expected.

Another View: DCF Points to a Very Different Story

While the 6.8x P/S suggests mixed value, our DCF model presents a different perspective. It estimates future cash flow value at $457.69 per share versus the current $55.41 price, which screens as trading well below that fair value estimate. Could the P/S ratio be missing something here?

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 49 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

All of this paints a mixed picture, so if you are curious, now may be a good time to look through the data yourself and weigh up the 2 key rewards and 1 important warning sign.

Looking for more investment ideas?

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• Spot potential bargains early by scanning our list of 49 high quality undervalued stocks that pair compelling prices with solid fundamentals.
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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.