Iovance Biotherapeutics (IOVA) has moved back into focus after promising clinical trial results and favorable FDA designations, developments that have lifted sentiment around its Tumor Infiltrating Lymphocyte platform and its potential for future growth.

The latest 6.3% 1 day share price return to US$2.36 comes after a tougher stretch, with the year to date share price return of 6.35% and a 1 year total shareholder return decline of 60.07%. Momentum has only recently started to improve as the clinical updates and fresh FDA designations reset how investors are thinking about risk and long term potential.

If Iovance's recent news has you looking across oncology, this could be a good moment to scan other biotech names through healthcare stocks and see what else fits your watchlist.

With the share price at US$2.36 after a 60.07% 1 year total return decline and a value score of 4, is Iovance quietly offering mispriced upside, or is the market already accounting for all the future growth?

Most Popular Narrative: 71.7% Undervalued

With Iovance Biotherapeutics last closing at US$2.36 versus a narrative fair value of US$8.35, the gap between price and expectations is wide and very clear.

The analysts have a consensus price target of $9.1 for Iovance Biotherapeutics based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $20.0, and the most bearish reporting a price target of just $1.0.

Want to see what kind of revenue ramp and margin shift need to happen to support that kind of upside gap? The narrative leans on aggressive top line compounding, a sharp swing from heavy losses to positive earnings, and a future earnings multiple more often associated with high growth leaders. Curious how those ingredients are blended into a single fair value number? Read on and test whether those assumptions line up with your own view.

Behind that US$8.35 fair value is a model that assumes fast revenue compounding over several years, a move from deep losses to positive profit margins, and a relatively low discount rate of 7.09% to bring those future cash flows back to today.

It also leans on Iovance eventually earning a profit margin in the low single digits, which is a very different profile to the current net loss of US$397.6 million on US$250.4 million of revenue.

On top of that, the narrative expects future earnings to support a P/E multiple well into the triple digits, far above the current P/E multiple cited for the broader US biotechs group.

Those ingredients together help explain why the current share price is framed as trading at a 71.7% discount to fair value, even after a difficult share price history and ongoing losses.

Result: Fair Value of $8.35 (UNDERVALUED)

However, the whole story can change quickly if regulatory setbacks outside the US persist, or if dependence on high priced Amtagvi runs into reimbursement or pricing pressure.

Build Your Own Iovance Biotherapeutics Narrative

If you see the assumptions differently or want to pressure test the numbers yourself, you can build a custom Iovance view in just a few minutes, starting with Do it your way.

A great starting point for your Iovance Biotherapeutics research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

Looking for more investment ideas?

If Iovance has caught your attention, do not stop there. Use this momentum to line up your next watchlist candidates with a few focused screens.

• Spot potential value candidates early by scanning these 873 undervalued stocks based on cash flows that currently trade below what their cash flows suggest.
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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.