Is Royalty Pharma Plc (RPRX) overvalued?
On Equity Rank's model estimate, RPRX trades 115% above its fair value. Royalty Pharma Plc (RPRX) last closed at $67.30; the multi-method model fair value is $31.29.
| Price | Model fair value | Price vs model |
|---|---|---|
| $67.30 | $31.29 | 115% above |
What the answer rests on
- 2 of 7 valuation methods put RPRX's value above its price and 5 put it below, so the methods disagree.
- To justify today's price, RPRX's free cash flow would need to grow about -2.7% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 189.3% a year.
- RPRX trades at 44.2 times its last year's earnings, against a median of 19.7 for 24 profitable Biotechnology companies.
- Over the past year the price sat below the model fair value on 54% of trading days. The gap ranged from 19% below to 116% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind RPRX's fair value · What prices assume · Other companies