Why Relay Therapeutics (RLAY) is on investors’ radar

Relay Therapeutics (RLAY) has drawn attention after a strong stretch of share price performance, including a positive move over the past month and an even stronger gain in the past 3 months.

At a latest share price of $8.92, Relay Therapeutics has seen momentum build, with a 1 day share price return of 9.45% and a 90 day share price return of 44.57%, while the 1 year total shareholder return of 111.37% contrasts with weaker 3 and 5 year total shareholder returns.

If this kind of rebound in sentiment has your attention, it could be a good moment to see what else is moving in healthcare focused AI, starting with our 26 healthcare AI stocks.

With Relay Therapeutics trading at $8.92 versus an average analyst price target of $14.55, the key question is whether the recent surge still leaves room for upside or if the market is already pricing in future growth.

Preferred Price to Book of 2.5x, Is it justified?

Relay Therapeutics is trading on a P/B of 2.5x, which sits well below the peer average of 13.3x and slightly below the broader US biotech industry at 2.6x.

P/B compares the company’s market value to its net assets, which can be useful for early stage or unprofitable biotech names where earnings are not yet a guide. For Relay Therapeutics, this type of metric anchors valuation to the balance sheet rather than current profits, which are still negative.

Relay Therapeutics is currently loss making and is forecast to remain unprofitable over the next 3 years. A P/B in line with the wider biotech industry and far below peers suggests the market is not assigning a premium to its pipeline or future earnings potential relative to those comparison groups.

Against the US biotech industry average of 2.6x, Relay Therapeutics' 2.5x P/B points to a price that is broadly in the same range, while looking inexpensive versus the 13.3x peer average. That contrast highlights how cautiously the market appears to be pricing the company compared to some similar names.

Result: Price to book ratio of 2.5x (ABOUT RIGHT)

However, Relay Therapeutics still reports annual net losses of about US$297.6m and relies on early stage clinical assets, so setbacks in trials or partnerships could quickly cool sentiment.

Build Your Own Relay Therapeutics Narrative

If you look at the numbers and come to a different conclusion, or simply prefer to trust your own work, you can build a personalised view of Relay Therapeutics in just a few minutes, starting with Do it your way.

A great starting point for your Relay Therapeutics research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.

Looking for more investment ideas?

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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.