Madrigal Pharmaceuticals has produced very strong long term returns, and recent headlines around its liver drug Rezdiffra and related whistleblower allegations have pushed the valuation debate back to center stage. With the share price around US$425, investors are asking whether the current market tag can be grounded in the company’s sales profile.

• Over the past 5 years the stock has delivered a gain of about 416.0%, which puts a lot of weight on whether the present price still lines up with the underlying revenue base.
• Rezdiffra crossing a US$1b year to date sales milestone and helping Madrigal turn profitable brings the timing and durability of future product revenue into sharp focus for anyone thinking about what multiple of sales is sensible.
• There is a second opinion on Madrigal Pharmaceuticals worth weighing. See what analysts think Madrigal Pharmaceuticals's shares could be worth.

The issue now is whether Madrigal Pharmaceuticals’ current share price is adequately supported by its sales when judged against the Fair Ratio benchmark.

If you are weighing whether Madrigal Pharmaceuticals’ current tag around US$425 is reasonable for its sales profile, it can help to compare that theme against a basket of 32 high quality undervalued stocks.

Is Madrigal Pharmaceuticals a Bargain on Sales?

P/S is usually the cleanest yardstick for a biotech like Madrigal Pharmaceuticals because revenue is more stable than earnings while investment in trials and launches runs high. On this...

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