Olema Pharmaceuticals (OLMA) is back on trader watchlists after recent analyst commentary around its breast cancer pipeline and management’s confirmation that key clinical milestones remain on schedule through 2026.

At a share price of US$25.72, Olema has eased back slightly in the last session, but its roughly 205% 90 day share price return and very large 1 year total shareholder return suggest momentum has been building as investors weigh the Phase 3 pipeline against recent leadership changes.

If Olema’s story has you looking across the sector, this could be a good moment to scan other names in healthcare stocks and spot companies pursuing different approaches to growth and risk.

With Olema still trading at a discount to recent analyst targets despite its very large 1 year return and upcoming Phase 3 readouts, it is worth asking whether there is still upside on the table or if the market is already pricing in future growth.

Preferred Price to Book of 6.6x: Is It Justified?

On a P/B of 6.6x and a last close of $25.72, Olema looks expensive versus the broader US biotech group, but cheaper than its immediate peer set.

The P/B ratio compares a company’s market value to its net assets. This often matters for early stage biopharma names that are still loss making and building out pipelines rather than posting earnings. For Olema, this means you are paying a multiple of its book value while the business is still reporting a net loss of $149.957m and making less than $1m in revenue.

Against the US Biotechs industry average P/B of 2.6x, Olema’s 6.6x stands out as materially higher. This suggests the market is assigning a premium to its breast cancer programs and forecast revenue growth. However, compared with its peer average P/B of 8.7x, that same 6.6x looks more restrained. This may reflect a balance between enthusiasm for the pipeline and awareness that the company is currently unprofitable and not forecast to achieve profitability over the next 3 years.

Result: Price to Book of 6.6x (ABOUT RIGHT)

However, you also need to weigh the ongoing net loss of $149.957m and Olema’s dependence on successful breast cancer trial outcomes to support the current valuation.

Another View: What Does Our DCF Say?

If you put the P/B argument to one side and look at our DCF model, Olema at $25.72 is trading about 15.5% below an estimated future cash flow value of $30.42. So while the P/B screen flags a rich valuation, the cash flow view points to a possible gap. Which lens do you trust more?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Olema Pharmaceuticals 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 877 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Olema Pharmaceuticals Narrative

If this view does not align with your own, or you would prefer to work directly with the numbers, you can build a custom thesis in just a few minutes using Do it your way.

A great starting point for your Olema Pharmaceuticals research is our analysis highlighting 3 key rewards and 4 important warning signs that could impact your investment decision.

Looking for more investment ideas?

If Olema has caught your attention, do not stop here. Use the screener to spot other stocks that fit your style before the market moves without you.

• Target potential mispricing by scanning these 877 undervalued stocks based on cash flows to compare current prices with underlying cash flows and balance sheet strength.
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• Tap into income focused opportunities with these 12 dividend stocks with yields > 3% that offer yields above 3% and a different return profile to early stage biotech names.

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.