Recent share performance and business snapshot

Aurinia Pharmaceuticals (AUPH) has seen mixed short term returns, with the stock down 1.1% over the past day but up around 2% over the past week and month.

Over the past 3 months, the stock has gained about 5.8%, contributing to a total market value of roughly US$2.0b, backed by annual revenue of US$298.3m from its autoimmune focused therapies.

At a share price of US$15.66, Aurinia has posted modest short term share price gains so far this year. A 1 year total shareholder return of 92.38% and a 3 year total shareholder return of 56.29% point to strong longer term momentum as investors reassess its autoimmune drug portfolio and risk profile.

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With Aurinia trading at US$15.66, sitting about 9% below the consensus price target and carrying an estimated 62% intrinsic discount, is the stock still undervalued, or is the market already pricing in future growth?

Most Popular Narrative: 7.9% Undervalued

At US$15.66, Aurinia is trading below the most followed fair value estimate of US$17.00, which rests heavily on its autoimmune franchise and capital decisions.

The company is progressing a potentially best-in-class pipeline asset, aritinercept, targeting multiple B-cell mediated and rare autoimmune diseases, with Phase I success and further clinical studies in multiple indications set to begin this year. This strategy leverages the trend of increased healthcare expenditure and expedited regulatory pathways for rare/orphan disease therapies. (Future revenue growth and pipeline diversification, potential for higher net margins)

Want to see what this pipeline story assumes for future sales, margins, and valuation multiples? The fair value hinges on a tight set of earnings and revenue expectations that are not obvious from the share price alone.

Result: Fair Value of $17.00 (UNDERVALUED)

However, investors still need to weigh Aurinia’s heavy reliance on LUPKYNIS, as well as the risk that higher R&D spending or pricing pressures could squeeze future profitability.

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Next Steps

If this mix of long term gains and pipeline potential sounds interesting, it is worth looking through the underlying data yourself and weighing both sides quickly. Then check out the 4 key rewards and 2 important warning signs

Looking for more investment ideas?

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• Target potential bargains by scanning for companies that combine quality fundamentals with attractive pricing through the 47 high quality undervalued stocks.
• Prioritize stability by reviewing companies that show robust finances and conservative balance sheets using the solid balance sheet and fundamentals stocks screener (46 results).
• Aim to spot underfollowed opportunities early by checking a screener containing 21 high quality undiscovered gems.

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.