IRWD
Ironwood Pharmaceuticals, Inc.
$3.86
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Undervalued
Trading 49.1% below fair value
You pay
$3.86
Bear
$6.50
Fair
$7.58
Bull
$8.66
Bear
$6.50
+68.3%
$0.66 × 12x P/E
Fair
$7.58
+96.3%
$0.66 × 14x P/E
Bull
$8.66
+124.4%
$0.66 × 16x P/E
Key Value Driver
Normalized P/E multiple (14x base case)
Implied Market Multiple
5.8x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $3.70 from 30 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $7.58 per share.
Warnings
The company's reported profits differ from official accounting profits by 340%. Check what costs are being left out of the adjusted number.
Wall Street's average price target is $3.70 (from 30 analysts). Our estimate is 150% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples