Kyowa Kirin (TSE:4151) has posted steady revenue growth over the past year, with its annual net income rising by 18%. The company’s shares have climbed 10% in the past month, drawing more eyes to its performance.
See our latest analysis for Kyowa Kirin.
After a relatively sluggish start to the year, Kyowa Kirin’s share price has picked up momentum with a 1-month share price return of 9.7%. That said, its total shareholder return has been slightly negative over the past twelve months and remains underwhelming across three and five years. This suggests the recent pop may reflect shifting sentiment or renewed optimism for the company’s outlook.
If this renewed momentum has you curious about what else is gaining traction, now is a perfect time to broaden your search and discover fast growing stocks with high insider ownership
With fundamentals on the rise and shares still trading just below analyst targets, the question for investors now is whether Kyowa Kirin’s recent jump signals a real buying opportunity or if the market has already factored in its future growth.
Kyowa Kirin trades at a notably high price-to-earnings (P/E) ratio of 35.7x, placing it well above both the Japanese pharmaceutical industry average and its closest peers. At the last close of ¥2,492, the stock commands a premium valuation from the market.
The P/E multiple reflects how much investors are willing to pay for each unit of the company’s earnings. In pharmaceutical and biotech sectors, high P/E ratios often signal anticipated future profits, innovation, or defensiveness. However, they can also indicate that expectations may already be priced in, especially if recent earnings have faced significant volatility.
When compared to the industry average P/E of 15.3x and the peer average of 16.5x, Kyowa Kirin’s valuation stands out as particularly expensive. The P/E ratio also exceeds the estimated fair value multiple of 22.8x, suggesting that the current price could decline if market sentiment shifts or growth underdelivers.
Explore the SWS fair ratio for Kyowa Kirin
Result: Price-to-Earnings of 35.7x (OVERVALUED)
However, sluggish long-term returns and a steep premium to peers could both act as potential headwinds for Kyowa Kirin’s optimistic outlook.
Find out about the key risks to this Kyowa Kirin narrative.
While Kyowa Kirin’s high price-to-earnings ratio suggests the stock is expensive compared to peers, the Simply Wall St DCF model offers a very different perspective. This methodology estimates Kyowa Kirin is trading roughly 53% below its fair value, challenging the notion that shares are overvalued. Could the market be missing something?