Valuation Scorecard: Stock Rating D-Negative (2/26/24)-Ionis Pharmaceuticals Inc (IONS).

Ionis Pharmaceuticals’ common shares will need to reach $73 to achieve average annual stock market performance of 9.0% over the next 6 years. Ionis Pharmaceuticals’ stock price will need to reach $86 by 2028 to achieve upper quartile performance. What is the market’s view of Ionis Pharmaceuticals’ future operating performance as reflected in the current price of $44?

Executive Summary

• Price Target Research identifies Ionis Pharmaceuticals as having: high stability, above average financial strength, very low profitability, and very low expected growth. A big positive influence on Ionis Pharmaceuticals’ valuation is its superior Risk Profile.
• Very high valuation, above market shareholder returns. Current valuation levels are very high relative to the Ionis Pharmaceuticals Peer Group. Recent market returns have outperformed the Ionis Pharmaceuticals Peer Group. Total shareholder returns expected to significantly lag the overall equity market. Based on current investor expectations, Ionis Pharmaceuticals shares should reach a level of $6 by 2028 — an -28.9% per year total shareholder return. A 2028 stock price of $73 would reflect median performance and a price of $86 would be required to reach upper quartile performance.
• Ionis Pharmaceuticals’ past growth is average. Historical growth has been average relative to the Ionis Pharmaceuticals Peer Group and forecasted growth is relatively very low. EPS Growth, Asset Growth, and Revenue Growth have lagged. These factors have negatively affected market perceptions of Ionis Pharmaceuticals. Ionis Pharmaceuticals’ historical income statement and balance sheet growth are not available.
• Asset Turnover, Pretax Margin, and Return on Equity are group lagging. These factors have negatively affected market perceptions of Ionis Pharmaceuticals. The company has very low cash and will have to work to generate attractive investments and improve valuation.
• Risk Profile has been Ionis Pharmaceuticals’ biggest valuation strength. Ionis Pharmaceuticals’ risk profile is favorable. Overall variability has been very high with very high revenue variability, relatively low E.P.S. variability, and very low stock price volatility. Financial Strength is relatively high and earnings’ expectations are below average. The debt/capital ratio has declined very significantly.

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