• Investors may be asking whether Collegium Pharmaceutical at around US$46.90 is offering good value right now, or if most of the upside has already been priced in.
• The share price has seen mixed recent returns, with a 3.9% decline over the past week and a 3.7% decline over the past month, while still sitting on a 40.2% return over 1 year and 98.6% over 5 years.
• Recent coverage has focused on how investors are reassessing specialty pharmaceutical names like Collegium Pharmaceutical in light of ongoing developments around pain management therapies and the broader prescription drug environment. This context helps explain why the stock can show short term pullbacks while still carrying a stronger multi year return profile.
• On the valuation checks, Collegium Pharmaceutical scores 2 out of 6, as shown in its valuation score. Next, it is useful to compare the usual valuation approaches and then look at a more complete way to judge whether the current price makes sense.

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

Approach 1: Collegium Pharmaceutical Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business could be worth by projecting its future cash flows and discounting them back to today, so you can compare that value with the current share price.

For Collegium Pharmaceutical, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections in $. The latest twelve month free cash flow is about $289.3 million. Analyst inputs extend through 2030, with Simply Wall St extrapolating beyond the typical five year analyst window. Within these projections, selected discounted free cash flow figures include $346.3 million in 2026 and $233.4 million in 2030.

When these forecast cash flows are added up and discounted, the model arrives at an estimated intrinsic value of about $240.35 per share. Compared with the current share price of around $46.90, the DCF output implies the stock is about 80.5% undervalued on this metric.

On this measure alone, Collegium Pharmaceutical screens as materially undervalued.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Collegium Pharmaceutical is undervalued by 80.5%. Track this in your watchlist or portfolio, or discover 868 more undervalued stocks based on cash flows.

Approach 2: Collegium Pharmaceutical Price vs Earnings

For profitable companies, the P/E ratio is a useful way to gauge how much you are paying for each dollar of earnings, which is often more tangible for investors than revenue or book value alone. A higher or lower P/E usually reflects what the market thinks about a company’s future earnings growth and risk profile, with stronger growth and lower perceived risk typically supporting a higher “normal” P/E.

Collegium Pharmaceutical currently trades on a P/E of about 25.37x. That is above the broader Pharmaceuticals industry average of around 20.83x and slightly higher than the peer group average of roughly 24.62x. Simply Wall St also provides a proprietary “Fair Ratio” of 23.38x, which represents the P/E that might be expected given factors such as Collegium’s earnings growth profile, industry, profit margins, market cap and specific risks.

This Fair Ratio can be more useful than a simple industry or peer comparison because it adjusts for the company’s own characteristics rather than assuming all drug makers deserve the same multiple. Comparing the Fair Ratio of 23.38x with the current P/E of 25.37x suggests the shares are trading above that fair level, so on this metric the stock appears overvalued.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Collegium Pharmaceutical Narrative

Earlier we mentioned that there is an even better way to think about valuation. On Simply Wall St’s Community page you can use Narratives to link your view of Collegium Pharmaceutical’s story to specific forecasts and a fair value. For example, one investor might build a bullish Narrative that leans on the US$55 to US$56 price targets and fair value of about US$53.17, while another might build a more cautious Narrative around US$40. The platform will continuously update those story driven forecasts and resulting fair values as new earnings, guidance or news arrives, allowing you to compare each Narrative’s fair value to the current price and decide for yourself whether the stock looks attractively or fully priced.

Do you think there's more to the story for Collegium Pharmaceutical? 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.