• Wondering whether Alnylam Pharmaceuticals at around US$295.91 is offering fair value right now, or if the price is running ahead of the story? This article breaks down what the numbers suggest.
• The stock has seen mixed returns with a 4.4% decline over the last 7 days and a 7.4% decline over 30 days, but it is still up 14.5% over 1 year, 43.6% over 3 years and 122.6% over 5 years.
• Recent headlines have focused on Alnylam Pharmaceuticals' role in RNA interference based therapies and how its drug pipeline could influence long term expectations for the business. At the same time, investors have been reacting to updates around clinical trial progress and regulatory milestones, which often influence risk perception for biotech stocks.
• On Simply Wall St's 6 point valuation checklist, Alnylam Pharmaceuticals scores 2 out of 6, as shown in its valuation score. The next sections will compare different valuation approaches and then look at a broader way of thinking about value that goes beyond a single model.

Alnylam Pharmaceuticals scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Alnylam Pharmaceuticals Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model projects the cash a company might generate in the future and then discounts those cash flows back to today to estimate what the business could be worth right now.

For Alnylam Pharmaceuticals, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month free cash flow is about $633.9 million. Analyst estimates and extrapolations used by Simply Wall St project free cash flow reaching about $3.2b by 2030, with intermediate annual projections between 2026 and 2035 that are gradually discounted back to today in the model.

Bringing all those projected cash flows into today’s dollars leads to an estimated intrinsic value of about $617.37 per share, compared with the recent share price around $295.91. On this basis, the DCF implies the stock is roughly 52.1% undervalued.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Alnylam Pharmaceuticals is undervalued by 52.1%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

Approach 2: Alnylam Pharmaceuticals Price vs Earnings

For profitable companies, the P/E ratio is a straightforward way to think about value because it links what you pay for the stock to the earnings the business is currently generating. Investors usually accept a higher P/E when they expect stronger earnings growth or see lower risk, and a lower P/E when they expect slower growth or higher risk.

Alnylam Pharmaceuticals currently trades on a P/E of 73.44x. That is higher than the Biotechs industry average P/E of about 17.76x and above the peer group average of 30.42x. To refine this comparison, Simply Wall St uses a “Fair Ratio”, which is the P/E level it estimates for Alnylam Pharmaceuticals after accounting for factors such as earnings growth, profitability, industry, market cap and risk profile.

For Alnylam Pharmaceuticals, the Fair Ratio is 29.82x, which is well below the current P/E of 73.44x. Because the Fair Ratio incorporates company specific drivers rather than just broad peer or industry comparisons, it can give a more tailored view of what investors might reasonably pay for each dollar of earnings. On this basis, Alnylam Pharmaceuticals stock looks expensive relative to its Fair Ratio.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Alnylam Pharmaceuticals Narrative

Earlier it was mentioned that there is an even better way to think about valuation, so meet Narratives, a simple tool on Simply Wall St’s Community page that lets you set out your own story for Alnylam Pharmaceuticals, link that story to specific forecasts for revenue, earnings and margins, and translate those assumptions into a Fair Value that can be compared with the current price to help you decide whether to buy, hold or sell. You can also see how other investors’ Narratives range from more cautious views that align with a Fair Value around US$310 to more optimistic cases closer to US$566. Everything is updated automatically as new earnings, clinical data or news are fed into the platform.

Do you think there's more to the story for Alnylam Pharmaceuticals? 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.