• If you are wondering whether Kodiak Sciences' share price still reflects its true worth after a strong run, this article walks through what the current valuation might be telling you.
• The stock closed at US$27.07, with returns of 3.6% over 30 days, 4.0% year to date and 194.2% over the last year, alongside a 3.2% decline over the past week and a 236.7% gain across three years, compared with an 82.4% decline over five years.
• Recent coverage around Kodiak Sciences has centered on its position in the pharmaceuticals and biotech space and investor reactions to its pipeline progress and financing updates. These developments have given context to the sharp moves in the share price, as the market weighs potential upside against execution and funding risks.
• On our 6 point valuation checklist, Kodiak Sciences scores 1 out of 6. This raises questions about how different valuation approaches compare and hints at an even richer way of understanding value that we will come back to at the end of the article.

Kodiak Sciences scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Kodiak Sciences Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company could be worth by projecting its future cash flows and discounting them back to today using a required rate of return.

For Kodiak Sciences, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is a loss of about US$127.3 million, and analyst inputs plus Simply Wall St extrapolations point to free cash flow of US$49.5 million by 2030. The ten year projections show several years of negative free cash flow before turning positive, which is typical for many biotech names that are still investing heavily in development.

Pulling all those projected cash flows together and discounting them back to today gives an estimated intrinsic value of about US$32.77 per share, based on this DCF model. Compared with the recent share price of US$27.07, that implies the stock is around 17.4% undervalued on these cash flow assumptions.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Kodiak Sciences is undervalued by 17.4%. Track this in your watchlist or portfolio, or discover 883 more undervalued stocks based on cash flows.

Approach 2: Kodiak Sciences Price vs Book

For companies where current profits are limited or volatile, price based on book value can be a useful cross check because it compares what you pay in the market to the net assets on the balance sheet.

In practice, investors usually look for a higher P/B ratio when they expect stronger growth and are comfortable with higher risk, and a lower P/B when growth expectations are modest or the risk profile is higher than they would like.

Kodiak Sciences currently trades on a P/B ratio of about 70.81x. That is well above the Biotechs industry average of about 2.75x and the peer average of about 26.93x. This suggests that the market is placing a much higher value on its equity base than on typical companies in the same space.

Simply Wall St’s Fair Ratio is a proprietary estimate of what a reasonable P/B might be after accounting for factors such as earnings growth, risk, profit margins, industry, and market cap. This tailored yardstick can be more informative than a simple comparison with peers or an industry average, which treat very different businesses as if they deserve the same multiple.

Because a specific Fair Ratio is not available here, it is not possible to use this framework to say whether Kodiak Sciences looks overvalued, undervalued, or about right on a P/B basis.

Result: ABOUT RIGHT

P/B ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1446 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Kodiak Sciences Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your story about a company, linked to your own assumptions for future revenue, earnings and margins, and then tied through a forecast to a fair value that you can easily compare with the current share price.

On Simply Wall St, millions of investors build and share these Narratives on the Community page, so you can see how different stories about Kodiak Sciences, such as a more cautious view focused on financing risk or a more optimistic view around its pipeline, lead to different fair values and clearer decisions about whether the current price looks attractive or not.

Narratives stay live and useful because they update when new information like news or earnings is added, so your fair value and decision framework can move with the facts instead of staying frozen in an old model.

Do you think there's more to the story for Kodiak Sciences? 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.