CRISPR Therapeutics (CRSP) Rallies On Pipeline Focus, Is The 73% Discount Too Hard To Ignore?

Recent share performance and business snapshot

CRISPR Therapeutics (CRSP) has drawn fresh attention after recent trading, with the stock last closing at $59.50. That price comes alongside a market value of about $5.75b and a gene editing focused pipeline.

Over the past month, CRISPR Therapeutics has returned 27.85%, while the past 3 months show an 18.15% gain and the past year a 9.54% total return. The stock’s 5 year total return reflects a decline of 51.94%, which gives long term holders a very different experience from more recent buyers.

The company reports revenue of $13.39m from discovering, developing and commercializing therapies and a reported net loss of $451.14m. Annual revenue growth is 68.10% and annual net income growth is 68.60%, based on the latest figures provided.

• Return over the past day is 2.37%.
• Return over the past week is 11.11%.
• Year to date total return is 10.66%.
• 3 year total return is 19.74%.

CRISPR Therapeutics focuses on gene based medicines using its CRISPR/Cas9 platform, with programs across hemoglobinopathies, CAR T cell therapies, in vivo cardiovascular targets and type 1 diabetes. Its lead product candidate is CASGEVY, an ex vivo gene edited cell therapy for conditions such as transfusion dependent beta thalassemia and severe sickle cell disease.

The stock currently carries a value score of 3 and has an indicated intrinsic discount of 73.07%. For investors assessing CRISPR Therapeutics, the mix of recent share price gains, ongoing losses and pipeline exposure in gene editing will likely be key points of focus.

See our latest analysis for CRISPR Therapeutics.

For CRISPR Therapeutics, the recent 27.85% 1 month share price return and 11.11% 7 day share price return suggest momentum is building, even though the 5 year total shareholder return remains sharply negative.

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CRISPR Therapeutics trades at a steep discount to both intrinsic estimates and analyst targets after a strong recent bounce. Is that discount a sign of opportunity, or a warning that the market’s caution on this loss making biotech is justified?

DCF valuation: how cheap does CRISPR Therapeutics look?

The SWS DCF model currently estimates a fair value of about $220.94 per share for CRISPR Therapeutics, compared with the latest close at $59.50. On that basis, the stock is described as trading at roughly a 73.1% discount to this intrinsic value estimate.

A discounted cash flow model projects a company’s future cash flows and then discounts them back to today using a required rate of return. The result is an estimate of what those future cash flows might be worth in today’s dollars.

For CRISPR Therapeutics, this approach is particularly relevant because the company is still loss making, reports annual revenue of $13.39m, and is focused on gene based therapies that can involve long development timelines. The same data that underpins the forecasts in the model also reflects expectations that revenue and earnings will grow at high rates over the coming years, even though the company is currently unprofitable and return on equity remains negative.

The wide gap between the SWS DCF model value and the current $59.50 share price highlights how differently investors can view loss making biotech stocks, especially when there is a pipeline of programs but limited current revenue. Anyone using this sort of model should be comfortable with the assumptions going into long term cash flow forecasts, particularly for companies where commercial outcomes are still developing.

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

Result: DCF Fair value of $220.94 (UNDERVALUED)

However, CRISPR Therapeutics still reports a US$451.14m annual net loss and relies on a concentrated pipeline, so clinical or regulatory setbacks could quickly reset sentiment.

Find out about the key risks to this CRISPR Therapeutics narrative.

Another view on CRISPR Therapeutics’ valuation

While the SWS DCF model points to a large gap between fair value and the current $59.50 share price, the picture looks different when you look at the P/B ratio. CRISPR Therapeutics trades at 3.3x book value, which is higher than the US Biotechs industry average of 2.5x but lower than the peer average of 7.1x.

This mix of a large DCF discount and a premium to the industry P/B average sends a mixed signal on how much valuation risk or opportunity is really on the table. Which lens do you trust more when you think about a loss making biotech with a long development runway?

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out CRISPR Therapeutics 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 48 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With sentiment on CRISPR Therapeutics split between deep value potential and real execution risk, it helps to check the data directly and move quickly. To see what optimistic investors are focusing on right now, take a closer look at the 2 key rewards.

Looking for more investment ideas beyond CRISPR Therapeutics?

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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.

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