Telix shares are tumbling. Is the stock finally at fair value?

Telix Pharmaceuticals Ltd (ASX: TLX) shares are tumbling on Friday, falling 8% to $16.00. That is a sharp reversal after the stock climbed 5% on Thursday following the release of its half-year results.

Despite today's decline, Telix shares remain up around 42% year to date, although they are down roughly 4% over the past 12 months.

So, why are Telix shares plunging despite another strong set of numbers?

Telix delivers strong first-half growth

On Thursday, Telix reported a 22% year-on-year increase in revenue to US$477 million, tracking towards the upper end of its FY26 guidance. The company's gross margin improved to 55%, while its Precision Medicine segment delivered an impressive 65% margin.

Adjusted EBITDA jumped 146% to US$52 million, while profit after tax reached US$38 million. That included a US$40 million payment from Regeneron.

Operationally, Precision Medicine remained the key growth engine, with flagship products Illuccix and Gozellix continuing to gain market share.

The biotech company also achieved several important clinical milestones, including completing enrolment for late-stage trials and making regulatory progress across the US, China, Europe and Japan.

The business is simultaneously expanding its global manufacturing footprint through new and upgraded facilities in Australia, Belgium, Japan and the US.

Telix shares reaffirmed FY26 revenue and other income guidance of more than US$1 billion, with Research & Development expenditure expected to come in between US$230 million and US$270 million.

Why are Telix shares falling?

One clue for the plummeting Telix share price comes from Bell Potter.

The leading broker was pleased with Telix's first-half performance, but warned that competition could weigh on revenue later in the year. It said:

1H26 increased by 22% to $477m, dominated by US sales of PSMA imaging agents. FY26 revenue guidance range is unchanged at $950m – $970m with the company guiding to the upper end. We expect the launch of a competitor product (TruVu – Lantheus) will impact 4Q26 revenues, nevertheless, the top end of the guidance is realistic. We do not anticipate a change in guidance irrespective of 3Q26 revenues.

Importantly, Bell Potter now believes Telix shares are approaching fair value. As a result, it has downgraded the stock from buy to hold, while retaining its $19.00 price target.

That target still represents potential upside of roughly 17% from $16.00, but the downgrade may be giving investors pause after Telix's substantial gains this year.

In other words, today's sell-off may have less to do with disappointing results and more to do with valuation, competition and expectations for future growth.

The post Telix shares are tumbling. Is the stock finally at fair value? appeared first on The Motley Fool Australia.

Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Telix Pharmaceuticals. The Motley Fool Australia has recommended Telix Pharmaceuticals. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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