Viking Therapeutics (VKTX) is back in focus as investors weigh its status as a closely watched acquisition target against fresh concerns over VK2735’s side effects, capital needs, and rising competition in obesity drugs.

That mix of M&A speculation, VK2735 trial updates, and questions about future funding has kept the share price volatile, with a 1-year total shareholder return of 14.31% contrasting with a year-to-date share price return down 9.12%. This suggests momentum has cooled recently.

If the obesity drug story has your attention, it can be helpful to compare Viking with other healthcare-focused AI opportunities and see which ones stand out in the 35 healthcare AI stocks

With shares up 14.31% over the past year yet down 9.12% year to date, along with a recent close of $32.19 against a published analyst target of $92.58, some investors may wonder whether there is still a buying opportunity or if the market is already pricing in future growth.

Most Popular Narrative: 65.3% Undervalued

Viking Therapeutics’ most followed narrative points to a fair value of $92.72 per share versus the last close at $32.19, framing a large valuation gap that rests heavily on VK2735’s long term obesity potential and supporting pipeline moves.

Advancement of VK2735 into large, late stage obesity trials, with both VANQUISH-1 and VANQUISH-2 designed around weight loss endpoints, positions the company to address growing medical demand for obesity treatments, which could be a key driver of future revenue once the program moves beyond current net losses.

Curious what kind of future revenue base, margins, and share count this narrative is building in, and how a very high future earnings multiple ties it all together?

The fair value estimate of $92.72 uses a 7.06% discount rate and leans on analyst expectations for future revenue, earnings and profitability, even though Viking currently reports no revenue and a loss of $472.34 million. Analysts in this narrative also see share count rising over time and assume the stock trades on a P/E multiple far above the wider US Biotechs industry once earnings turn positive.

Investors comparing this narrative to the current $32.19 price may want to weigh that upside scenario against the company’s clinical stage status, forecast lack of profitability over the next three years and the wide spread between the most bullish $125.00 and most cautious $35.00 analyst targets mentioned in the narrative. The result is a valuation story that is ambitious on future earnings power and the price investors might be willing to pay for those earnings.

Result: Fair Value of $92.72 (UNDERVALUED)

However, this bullish setup still leans on a single late stage VK2735 program and rising R&D spending, so trial setbacks or fresh equity raises could quickly challenge it.

Another View: SWS DCF Looks Far More Cautious

Those analyst targets paint a very optimistic picture, but the Simply Wall St DCF model points a different way, with an estimate of future cash flow value of $7.54 per share versus the current $32.19. That implies the stock is trading well above this cash flow view. Which story do you trust more?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Viking Therapeutics 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 46 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

With such different valuation signals, do you feel the bullish or cautious case makes more sense for your portfolio right now? To pressure test the story further, consider how the company’s 2 important warning signs could influence your own conclusion.

Looking for more investment ideas?

If Viking feels like only part of the picture, now is the moment to widen your watchlist and see what other opportunities are quietly taking shape.

• Spot potential bargains early by checking companies that appear mispriced on quality and fundamentals in the 46 high quality undervalued stocks.
• Strengthen your portfolio’s foundation by focusing on resilient businesses screened in the solid balance sheet and fundamentals stocks screener (46 results).
• Get ahead of the crowd by scanning the screener containing 22 high quality undiscovered gems before these stories become widely followed.

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.