• If you are trying to figure out whether TG Therapeutics at around US$29 per share is offering good value or just noise, you are in the right place.
• The stock has had mixed returns, with a 0.3% decline over the last 7 days, a 4.9% decline over 30 days, a 0.8% decline year to date, a 6.7% decline over 1 year and a 78.6% gain over 3 years, while the 5 year return stands at a 35.0% decline.
• Recent attention on TG Therapeutics has centered on its product portfolio and regulatory milestones in the biotechnology space, which can influence how investors think about future cash flows and risk. This kind of news flow often feeds directly into sentiment, helping to explain why returns over shorter periods look quite different to the longer term picture.
• On our valuation checklist, TG Therapeutics earns a score of 5 out of 6. Next, we will look at how different valuation approaches assess the stock and then finish with a way of thinking about value that goes beyond any single model.

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

The Discounted Cash Flow model takes estimates of a company’s future cash flows, then discounts them back to today’s value to arrive at an estimate of what the business might be worth per share.

For TG Therapeutics, the DCF here uses a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is a loss of $70.18 million, so the model relies heavily on future projections. Analysts have provided explicit free cash flow estimates out to 2030, with forecast free cash flow of $771.43 million in that year. Beyond the first five years, Simply Wall St extrapolates the remaining projections rather than using additional analyst estimates.

Discounting these projected cash flows results in an estimated intrinsic value of about $136.34 per share. Compared with the recent share price around $29, the model implies the stock is about 78.7% undervalued on this set of assumptions.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests TG Therapeutics is undervalued by 78.7%. Track this in your watchlist or portfolio, or discover 56 more high quality undervalued stocks.

Approach 2: TG Therapeutics Price vs Earnings

For a profitable company, the P/E ratio is a useful way to think about what you are paying for each dollar of earnings, because it ties the share price directly to the bottom line. Investors usually expect a higher P/E when a company’s earnings outlook appears stronger or less risky, and a lower P/E when growth expectations are more modest or risks feel higher.

TG Therapeutics currently trades on a P/E of 9.49x. That compares to the Biotechs industry average P/E of 22.17x and a peer group average of 52.99x, so the stock is on a lower multiple than both its sector and peers. Simply Wall St also calculates a “Fair Ratio” for the P/E, which is 19.21x for TG Therapeutics. This Fair Ratio is a proprietary estimate of what the P/E should be, given factors such as earnings growth, profit margins, industry, market cap and company specific risks.

Because the Fair Ratio blends these fundamentals, it can be more tailored than a simple comparison to broad industry or peer averages. With the actual P/E of 9.49x sitting below the Fair Ratio of 19.21x, this approach points to the shares looking undervalued on earnings.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your TG Therapeutics Narrative

Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St's Community page you can use Narratives, which let you set out your own story for TG Therapeutics, link that story to a forecast for revenue, earnings and margins, and translate it into a fair value that updates as new news or earnings arrive. You can then compare that evolving fair value with the live share price and decide whether it looks closer to a bearish view around US$12.34 or a bullish view near US$60, all in a format that is easy to adjust and compare with what millions of other investors are thinking.

For TG Therapeutics however, here are previews of two leading TG Therapeutics narratives:

Fair value in this bullish narrative: US$44.43 per share

Implied undervaluation vs last close of US$29.06: about 34.6%

Revenue growth assumption in this bullish view: 37.89% a year

• Assumes BRIUMVI's subcutaneous launch, broader access and favorable demographics support higher long term revenue and margin potential.
• Builds in strong earnings growth expectations, with higher projected profit margins and a P/E that remains above the current Biotechs industry level by 2028.
• Highlights reliance on a single key product and regulatory or pricing changes as important risks that could unsettle this more optimistic path.

Fair value in this bearish narrative: US$15.49 per share

Implied overvaluation vs last close of US$29.06: about 46.7%

Revenue growth assumption in this bearish view: 36.69% a year

• Focuses on concentration risk in BRIUMVI, potential pricing pressure, rising costs and future patent expiry as reasons to be cautious on long term earnings.
• Builds a lower revenue and earnings path than the bullish view and applies a future P/E of 10.45x, well below the current Biotechs industry multiple.
• Accepts that the business could still grow, but argues that market expectations and higher targets may already assume more than the company ultimately delivers.

Taken together, these narratives frame a wide range of reasonable views around TG Therapeutics' earnings power, risk profile and fair value. Your own view on BRIUMVI's durability, pricing, competition and execution will likely determine which side of that range feels closer to home.

Do you think there's more to the story for TG 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.