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Arrowhead Pharmaceuticals (ARWR) is back on many watchlists after a sharp total return over the past 3 months and the past year. This has prompted fresh questions about how its RNAi pipeline and current valuation line up.

See our latest analysis for Arrowhead Pharmaceuticals.

With the share price at US$64.52, Arrowhead has given investors a 64.47% 90 day share price return and a 218.77% 1 year total shareholder return. This suggests that momentum has recently built despite softer shorter term moves.

If Arrowhead’s run has you thinking about what else is moving in health related RNA and data driven therapies, it could be worth scanning 26 healthcare AI stocks as a fresh set of ideas.

After a move like that, the key question is simple: is Arrowhead still trading below what its pipeline and cash flows might justify, or has the recent run already pushed the stock to fully reflect future growth?

At a last close of $64.52 versus a narrative fair value of $64.08, Arrowhead is framed as slightly ahead of that fair value estimate, with the story hinging on how its RNAi pipeline translates into future earnings.

Arrowhead’s advancing late-stage clinical pipeline, especially the expected launch of plozasiran for FCS and SHTG, plus pivotal studies for three other RNAi therapies targeting major unmet needs, positions the company to capitalize on rising demand for innovative treatments driven by an aging population and increasing prevalence of chronic and genetic diseases, which could significantly accelerate revenue growth as approvals and launches materialize.

Read the complete narrative.

Want to see what kind of revenue curve and profit margins sit behind that small gap between price and fair value? The narrative leans on ambitious earnings, a steep rerating in valuation multiples, and a tight discount rate working together in ways the share price does not fully echo. Curious how those moving parts add up in the model and what would need to happen in the real world for them to line up?

Result: Fair Value of $64.08 (OVERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, there is still clear risk that delayed or disappointing Phase 3 outcomes, or weaker than expected partner milestones, could quickly challenge this optimistic setup.

Find out about the key risks to this Arrowhead Pharmaceuticals narrative.

While the narrative fair value of $64.08 paints Arrowhead as roughly in line with today’s $64.52 share price, our DCF model points the other way. On that cash flow view, Arrowhead is trading about 55% below an estimated value of $144.20, which is a wide gap for investors to think through.

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

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Arrowhead Pharmaceuticals 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 53 high quality undervalued stocks. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

If you see the numbers differently or prefer to stress test your own set of assumptions, you can build a complete Arrowhead narrative yourself in just a few minutes: Do it your way.

A great starting point for your Arrowhead Pharmaceuticals research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

If Arrowhead has sharpened your curiosity, do not stop here. The real edge often comes from comparing a few different high quality ideas side by side.

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.

Companies discussed in this article include ARWR.

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