Vera Therapeutics (VERA) is back on investors’ radar after Voya Investment Management’s Voya MidCap Opportunities Fund cited the stock as a top contributor, following successful phase three kidney disease trial results and progress in AI enabled drug discovery.

The recent clinical success and AI enabled pipeline work have kept Vera Therapeutics in focus, even as the 1 month share price return of 11.87% decline contrasts with a strong 90 day share price return of 57.61% and a very large 3 year total shareholder return of around 5x. Overall, that pattern points to momentum that has cooled in the short term after a strong multi year run as investors weigh trial progress, risks and the current share price of US$47.22.

If Vera’s recent move has caught your eye, this could be a good moment to scan other healthcare names using our healthcare stocks and see what else is shaping sentiment in the sector.

With Vera posting a very large 3 year total shareholder return, but a recent 1 month share price decline and the stock trading at US$47.22 with a sizeable discount to analyst targets, is this a reset that offers an entry point, or is the market already baking in future growth?

Preferred Multiple of 8.4x P/B: Is it justified?

Vera Therapeutics closed at $47.22, and its P/B ratio of 8.4x sits well above both the broader US Biotechs industry and its immediate peers.

P/B compares a company’s market value to its book value, which can help you see how much investors are paying for each dollar of net assets. For a clinical stage biotech with no revenue and a net loss of $251.943m, a high P/B often reflects how much weight the market is putting on the pipeline and potential future cash flows rather than current fundamentals.

According to the data, Vera’s 8.4x P/B is more than three times the US Biotechs industry average of 2.7x and also sits above the peer average of 7.4x. That is a clear premium. At the same time, our DCF model estimates a future cash flow value of $240.35 per share, with the stock described as trading at about an 80.4% discount to that figure. As a result, the P/B premium is sitting alongside a DCF output that implies a very different story.

Result: Price-to-book of 8.4x (OVERVALUED)

However, you also have to factor in the clinical and regulatory risk around atacicept, as well as the ongoing net loss of US$251.943m, which may pressure future funding needs.

Another View: DCF Suggests a Big Gap

While the P/B ratio makes Vera Therapeutics look expensive next to the US Biotechs industry and peers, our DCF model points the other way, with an estimated future cash flow value of $240.35 per share versus the current $47.22 price. If both numbers sit on your screen, which one feels more fragile?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Vera 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 885 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Vera Therapeutics Narrative

If you see the data differently or prefer to run your own checks, you can pull the numbers together and build a custom view in minutes, Do it your way.

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

Ready for more stock ideas?

If Vera has sparked your curiosity, do not stop here. Use this momentum to spot a few more opportunities that could fit your watchlist.

• Scan for potential value plays by checking out these 885 undervalued stocks based on cash flows that might be trading below what their cash flows suggest.
• Zero in on income opportunities by reviewing these 13 dividend stocks with yields > 3% that offer yields above 3%.
• Get ahead of sector shifts by tracking these 18 cryptocurrency and blockchain stocks that are tied to cryptocurrency and blockchain themes.

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.