If you are tracking Jazz Pharmaceuticals (JAZZ), the past few weeks have been especially interesting. The company’s new brain cancer therapy, Modeyso, just cleared two high-profile hurdles: first, the FDA granted it accelerated approval for treating difficult-to-manage gliomas; now, the National Comprehensive Cancer Network has endorsed Modeyso as a category 2A single-agent option for both adults and children. This double boost means more doctors may consider Modeyso for a wider group of patients, giving Jazz real momentum heading into the end of the year.

With these developments grabbing attention, investors have watched the share price steadily climb. Jazz has gained 16% over the past year, bouncing back after some rough patches that saw three- and five-year returns in the red. At the same time, recent licensing agreements, like the deal with Saniona for a new neuroscience pipeline drug, reinforce Jazz’s push beyond its core therapy areas. Signs suggest market confidence is growing, backed up by higher trading volumes after these clinical wins.

After this strong move and a string of headlines, the big question remains: does Jazz still present a buying opportunity at these levels, or is the market already pricing in the drug’s future success?

Most Popular Narrative: 32% Undervalued

According to the most widely followed narrative, Jazz Pharmaceuticals is trading well below its estimated fair value. Analysts forecast an attractive upside for the stock, driven by expectations of significant future earnings growth and improved profitability as new therapies roll out.

Robust expansion of the neuroscience and sleep portfolio (notably Xywav in narcolepsy and idiopathic hypersomnia) is backed by sustained net new patient additions. This growth benefits from increased disease awareness and diagnosis, which aligns with the rising demand for chronic condition management as populations age. This trend is positively impacting revenue and sustaining high gross margins.

Want to discover the financial engine powering this bullish view? This narrative includes some bold growth assumptions and outlines a potential future company transformation that could surprise skeptics. Get ready to explore the key figures and hidden formulas that shape Jazz’s striking valuation story.

Result: Fair Value of $186.47 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, looming patent expirations and intensifying competition in Jazz’s key products could challenge the optimistic picture if revenues do not meet high expectations.

Find out about the key risks to this Jazz Pharmaceuticals narrative.

Another View: What Does Our DCF Model Suggest?

Looking beyond the fair value estimate favored by analysts, our DCF model takes a fresh approach to Jazz Pharmaceuticals' valuation. Under this method, Jazz still appears undervalued, and this result is consistent with the earlier suggestion of upside. However, do the assumptions behind each method highlight different risks?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day ( check out Jazz Pharmaceuticals for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Jazz Pharmaceuticals Narrative

If you see things differently or want to dig into the numbers on your own terms, building a custom Jazz Pharmaceuticals story is fast and straightforward. Do it your way.

A great starting point for your Jazz Pharmaceuticals research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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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.