Apellis Pharmaceuticals (APLS) has just been added to the S&P 1000, S&P 600, S&P 600 Health Care Sector, and S&P Composite 1500, a shift that can influence trading as index trackers rebalance.

Those index additions come after a mixed share price run, with a 90 day share price return of 17.13% contrasting with a year to date share price decline of 12.76% and a 1 year total shareholder return decline of 25.30%. This suggests recent momentum has picked up even as longer term holders have seen weaker results.

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With Apellis trading at US$22.56 and sitting at a sizeable discount to analyst targets and some intrinsic estimates, the key question is whether this reflects an undervalued growth story or a market already pricing in what comes next?

Most Popular Narrative: 33.5% Undervalued

With Apellis at $22.56 versus a narrative fair value of $33.95, the current setup hinges on how its kidney and eye franchises mature.

The recent FDA label expansion for EMPAVELI into rare kidney diseases (C3G and IC MPGN), along with active plans to launch and pursue additional indications (FSGS and DGF), positions Apellis to access larger patient pools and accelerate long term topline growth, driven by the increasing prevalence of rare and age associated diseases. This is likely to result in higher future revenues and market diversification.

For readers curious about the revenue build up and margin path that support that fair value, and the future earnings multiple it assumes, the full narrative lays out the numbers behind that view in detail.

Result: Fair Value of $33.95 (UNDERVALUED)

However, the bullish story comes with real pressure points, including heavy use of free drug programs and questions over how consistently SYFOVRE revenue can build from this point.

Another View: Rich Earnings Multiple Puts The Brake On

The earlier fair value work suggests Apellis looks undervalued at $22.56 versus $33.95, but the earnings multiple tells a tougher story. The current P/E of 63.5x sits above both the US Biotechs industry at 20x and peer average at 57.8x, and more than double the fair ratio of 30.2x. This raises the question of how much upside is already priced in if sentiment cools.

Build Your Own Apellis Pharmaceuticals Narrative

If you see the story differently or prefer to weigh the numbers on your own terms, you can shape a custom thesis in just a few minutes: Do it your way.

A great starting point for your Apellis Pharmaceuticals research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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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.