Culper Research’s short report on Tarsus Pharmaceuticals (TARS), alleging potentially illegal Medicare copay practices tied to XDEMVY and overstated 2026 profit projections, has quickly become the main driver of recent trading and sentiment.

Looking beyond the immediate reaction to Culper’s report, Tarsus Pharmaceuticals’ recent trading shows short term momentum building, with a 9.45% 7 day share price return and a 13.11% 30 day share price return. This is set against a much stronger 1 year total shareholder return of 67.92% and a very large 3 year total shareholder return of about 2.8x.

If this kind of volatility has you thinking about where else growth stories could emerge in healthcare, it may be worth scanning a broader set of potential opportunities through our healthcare focused screener of 40 healthcare AI stocks

After the short report and a sharp move in Tarsus Pharmaceuticals’ share price, the stock now trades at a sizeable discount to both analyst targets and some intrinsic value estimates. Is that discount compensation for real risk, or has caution gone too far, as the valuation section shows?

Most Popular Narrative: 28.8% Undervalued

On the most followed narrative, Tarsus Pharmaceuticals’ fair value of $94.11 sits well above the last close at $67.05. This puts the focus squarely on how long term earnings and margins might evolve to close that gap.

Accelerated patient and physician adoption of XDEMVY, driven by a robust direct-to-consumer campaign and increased unaided awareness, points to ongoing demand expansion among an estimated 25 million potential U.S. patients, suggesting material runway for future top-line revenue growth.

Curious what kind of revenue curve, margin profile, and future earnings multiple need to line up for that valuation on Tarsus Pharmaceuticals to make sense? The narrative maps out a specific growth path, a sharp profitability shift, and a lower future valuation multiple that still supports a much higher fair value.

Result: Fair Value of $94.11 (UNDERVALUED)

However, the bullish Tarsus Pharmaceuticals narrative still hinges on XDEMVY sustaining high adoption and on SG&A spending eventually supporting rather than weighing on profitability.

Next Steps

If the mix of optimism and concern around Tarsus Pharmaceuticals feels hard to reconcile, move quickly to check the underlying data and form your own view using the 4 key rewards.

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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.