ImmunityBio (IBRX) is back in focus after the European Commission granted conditional marketing authorization for Anktiva plus BCG in BCG-unresponsive non-muscle invasive bladder cancer across 33 countries, expanding its global reach.

The European approval comes at a time when ImmunityBio’s share price has already seen strong momentum, with a 7 day share price return of 46.34% and a 90 day share price return of 304.65%, while the 1 year total shareholder return sits at 154.39%. These figures point to powerful recent momentum following a series of international Anktiva launches and partnerships.

If ImmunityBio’s recent surge has caught your attention, it could be worth widening your biotech watchlist with our screener of 27 healthcare AI stocks as another set of cancer focused opportunities to review.

With ImmunityBio now trading at US$8.70 and screening on some models as trading below certain intrinsic estimates and analyst targets, you have to ask: is there still potential here, or has the market already reflected expectations for future growth?

DCF says ImmunityBio could be worth far more than today's price

Our DCF model estimates a fair value for ImmunityBio of $20.69 per share, compared to the last close of $8.70. This implies a large valuation gap based on forecast cash flows.

The SWS DCF model projects the company’s future cash flows and discounts them back to today using a required return. The aim is to translate long term expectations into a single present value per share. For ImmunityBio, that means taking its current commercial stage profile and applying assumptions about future revenue growth, profitability and reinvestment to estimate what those future cash streams could be worth in today’s dollars.

This kind of model can be particularly relevant for a biotech name that is still loss making, with reported revenue of $82.56m and a net loss of $348.62m, since traditional earnings based multiples are less useful when profits are negative. It also helps put the recent share price surge into context by anchoring it against a cash flow based estimate rather than short term price moves.

Result: DCF Fair value of $20.69 (UNDERVALUED)

However, you still have to weigh sizeable risks, including ImmunityBio’s US$348.62m loss and the ongoing execution needs around Anktiva adoption and broader pipeline progress.

Next Steps

Curious whether the recent excitement matches the underlying story, or if the risks and rewards are more finely balanced than they appear at first glance? Take a moment to review the full breakdown for yourself and see how the mix of concerns and bright spots lines up with your own expectations through 2 key rewards and 4 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.