Relay Therapeutics (RLAY) is back on investors’ radar after a series of analyst upgrades, led by Oppenheimer, tied to interim data for its investigational breast cancer drug zovegalisib and concerns around rival therapy gedatolisib.

Relay’s recent analyst upgrades and zovegalisib data arrive after a mixed period for the shares, with a 30 day share price return of a 7.66% decline but a 1 year total shareholder return of 69.82%. This suggests that momentum has been rebuilding even after earlier multi year total shareholder return losses.

If this kind of biotech re rating has your attention, it could be a good moment to scan other healthcare stocks that might be reacting to clinical or regulatory news as well.

With shares at US$7.71, a value score of 2 and analyst targets clustered around US$12 to US$14, investors now have to ask: is Relay still trading at a discount, or are markets already pricing in future growth?

Preferred Multiple of Price to Book: Is it justified?

On a P/B of 2.2x, Relay Therapeutics is currently priced below both its US biotech peers at 2.7x and a much higher peer group average of 12.2x.

P/B compares the company’s market value to its net assets. It is often used for early stage or unprofitable biotech names where earnings are not yet a useful anchor. For Relay, this lens focuses attention on what investors are paying for the current R&D pipeline, cash and intellectual property on the balance sheet.

Against that backdrop, a 2.2x P/B that sits below the broader US biotech industry and well under a 12.2x peer average suggests the market is assigning a lower premium to Relay’s assets than to many comparable companies. That gap can reflect its current unprofitable status, forecasts that call for revenue growth of 53.4% a year but ongoing losses, and analyst forecasts that are not in tight agreement even though target prices sit well above the last close.

Compared to both the sector and the selected peer group, Relay’s P/B stands at a clear discount. This signals a cooler market view on its balance sheet value relative to others in the space.

Result: Price-to-book of 2.2x (UNDERVALUED)

However, you are still looking at a clinical stage company with an annual net loss of US$297.593m and no guarantee that its pipeline will convert into approvals.

Build Your Own Relay Therapeutics Narrative

If you see the data differently or prefer to piece things together yourself, you can build your own Relay view in minutes. You can start with Do it your way.

A great starting point for your Relay Therapeutics research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.

Looking for more investment ideas?

If Relay has sparked your interest, do not stop here. There are plenty of other opportunities worth checking before you decide where your next dollar goes.

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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.