Regulatory approval shifts focus to CRISPR Therapeutics stock

CRISPR Therapeutics (CRSP) has moved into the spotlight after securing regulatory approval for its first gene editing therapy, Casgevy, for blood disorders, along with progress in its CAR T pipeline.

At a share price of US$51.63, CRISPR Therapeutics has seen short term momentum pick up, with a 7 day share price return of 5.83%, while the 1 year total shareholder return of 34.98% contrasts with weaker multi year performance.

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So, with CRISPR Therapeutics trading at US$51.63, carrying a long-term total return record that trails its recent 1-year gain and sitting at a significant modeled discount to estimated value, is this a fresh entry point, or is the market already baking in years of future growth?

Preferred Price-to-Book of 2.6x: Is it justified?

CRISPR Therapeutics is flagged as good value relative to peers on one measure, with a Price-to-Book Ratio of 2.6x versus a peer average of 6.1x, yet it also screens as slightly expensive versus the broader US Biotechs industry, which sits at 2.3x.

The P/B ratio compares the company’s market value to its book value, which is essentially net assets on the balance sheet. For a business like CRISPR Therapeutics that is still loss making, P/B is often used instead of P/E because earnings are negative and do not scale cleanly against price.

Against its direct peer set, a 2.6x P/B ratio is materially lower than the 6.1x average. This suggests investors are paying less per dollar of book value than for many similar names. At the same time, the premium to the broader biotech industry’s 2.3x level shows the market is not pricing CRISPR Therapeutics at a deep discount across the sector, even though the company is currently unprofitable and carries a negative return on equity of 30.26%.

Result: Price-to-Book of 2.6x (ABOUT RIGHT)

However, investors still face clear risks here, including CRISPR Therapeutics’ loss making profile, with a US$581.599 million net loss, and historically weak 3 and 5 year returns.

Another lens on value: SWS DCF model

While the 2.6x P/B ratio points to middling value signals, the SWS DCF model paints a very different picture. With CRISPR Therapeutics at $51.63 and an estimated future cash flow value of $184.66, the stock is flagged as trading 72% below that fair value estimate. This raises the question of which signal may be more informative.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out CRISPR 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 50 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

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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.