Company overview and recent stock performance

Nektar Therapeutics (NKTR) has drawn fresh attention after an extended run in its share price, with the stock showing strong returns over the past 3 months and the past year.

For context, Nektar is a US based biopharmaceutical company focused on immunotherapy, with a pipeline that includes rezpegaldesleukin in Phase 2b for autoimmune and inflammatory diseases, plus several earlier stage candidates targeting autoimmune and fibrotic conditions, as well as certain cancers.

Nektar’s recent share price momentum is strong, with a 1 month share price return of 10.75% and a 3 month share price return of 79.07%. The 1 year total shareholder return is very large, even though the 5 year total shareholder return remains sharply negative.

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With the shares up sharply and trading at a discount of about 31% to the current analyst price target, investors now have to ask whether Nektar is still misunderstood or if the market is already pricing in future growth.

Most Popular Narrative: 40.9% Undervalued

On the most followed narrative, Nektar’s fair value of $128.13 sits well above the last close at $75.71, putting a lot of focus on what is driving that gap.

Strong initial Phase IIb and ongoing data for REZPEG in atopic dermatitis, combined with a large and growing addressable market (expected to reach nearly $30B by 2033), position Nektar to access significant new revenue streams and improve long-term earnings as the population ages and chronic inflammatory diseases rise globally.

Want to see what sits behind that projected fair value? The narrative leans heavily on future revenue swings, margin shifts and a punchy earnings multiple. The exact mix of those inputs might surprise you.

Result: Fair Value of $128.13 (UNDERVALUED)

However, the story can change quickly if rezpegaldesleukin stumbles in later stage trials or if ongoing losses and fresh equity raises start to weigh more heavily on sentiment.

Another way to look at valuation

The most followed narrative leans on long term earnings forecasts, but the current P/S ratio of about 39x tells a very different story. It sits well above the US pharmaceuticals average of 4.6x, the peer average of 9.5x, and a fair ratio of 12.8x. This points to meaningful valuation risk if sentiment turns or expectations ease.

That kind of premium means you are paying a lot today for potential future revenue. It is worth asking how confident you are in those assumptions, and how you would react if the share price moved closer to that fair ratio over time.

Next Steps

Curious whether the optimism in this story really outweighs the concerns? Act while the information is fresh and weigh both sides using our 1 key reward 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.