• Wondering whether Halozyme Therapeutics at US$71.71 still offers value, or if most of the opportunity is already priced in? This article walks through that question step by step.
• The stock shows returns of 3.6% over 7 days, 6.6% over 30 days, 2.0% year to date, 26.6% over 1 year, 36.2% over 3 years and 46.6% over 5 years, which naturally raises questions about how the current price lines up with its fundamentals.
• Recent news coverage around Halozyme has focused on its role in pharmaceutical partnerships and the broader interest in companies that support drug delivery platforms. This backdrop helps frame how investors are thinking about the risk and reward trade off that may be reflected in the share price.
• On Simply Wall St's valuation checks, Halozyme scores 5 out of 6. This suggests the stock screens as undervalued on most of the measures used. Next, we will walk through those methods before finishing with a way to look at valuation that can give you even more context.

Approach 1: Halozyme Therapeutics Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes a company’s expected future cash flows and discounts them back to what they might be worth in today’s dollars. It is essentially asking what you would pay now for all the cash Halozyme Therapeutics could generate for shareholders in the future.

For Halozyme, the model uses a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $596.8 million, and Simply Wall St applies analyst estimates where available and then extends those projections further out. For example, free cash flow is projected at $437 million in 2024, with estimates and extrapolations running through to 2035, all converted into today’s value using a discount rate.

When these cash flows are added up, the model arrives at an estimated intrinsic value of about $201.64 per share. Compared with the recent share price of about $71.71, this implies a discount of roughly 64.4%. This suggests the shares currently price in a much lower value than this cash flow based estimate.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Halozyme Therapeutics is undervalued by 64.4%. Track this in your watchlist or portfolio, or discover 868 more undervalued stocks based on cash flows.

Approach 2: Halozyme Therapeutics Price vs Earnings

For profitable companies like Halozyme Therapeutics, the P/E ratio is a useful shorthand for how much you are paying for each dollar of current earnings. It ties the share price directly to earnings, which is often the main driver of long term returns for established, profit making businesses.

What counts as a reasonable P/E depends on how investors see the company’s growth prospects and risk. Higher expected growth and lower perceived risk can support a higher P/E, while slower growth or more uncertainty usually line up with a lower multiple.

Halozyme currently trades on a P/E of 14.16x. This sits below the Biotechs industry average of 20.27x and also below the peer average of 19.26x. Simply Wall St’s Fair Ratio for Halozyme is 19.85x, which is an estimate of the P/E the company might typically trade on after considering its earnings growth profile, margins, industry, market cap and stock specific risks.

The Fair Ratio gives you a more tailored reference point than a simple comparison with peers or the sector, because it adjusts for differences in growth, profitability and risk. With the current 14.16x P/E sitting below the 19.85x Fair Ratio, the shares screen as undervalued on this metric.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Halozyme Therapeutics Narrative

Earlier we mentioned that there is an even better way to think about valuation, and that is where Narratives come in, letting you connect your view of Halozyme Therapeutics with the numbers behind it and the fair value you see as reasonable.

A Narrative is simply your story for the company, written in numbers as well as words, where your assumptions about future revenue, earnings and margins flow into a forecast, and that forecast then links through to a fair value per share.

On Simply Wall St, millions of investors use Narratives on the Community page as an easy way to set their own fair value, compare it with the current market price, and decide whether Halozyme looks closer to a buy, a hold or a sell for them. Each Narrative updates automatically when new news or earnings are added.

For example, one Halozyme Therapeutics Narrative on the Community page might assume very strong revenue growth and higher margins and arrive at a fair value well above US$201.64 per share. Another more cautious Narrative might use slower growth and lower margins and reach a fair value well below that figure.

Do you think there's more to the story for Halozyme Therapeutics? Head over to our Community to see what others are saying!

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.