Pharming Group (ENXTAM:PHARM): Valuation Insights Following Raised 2025 Outlook and Strong Earnings Momentum

Pharming Group (ENXTAM:PHARM) just raised its revenue outlook for 2025 following an impressive earnings update, with sales up sharply and net loss narrowing year-over-year. Investors are taking note of this renewed momentum.

See our latest analysis for Pharming Group.

With a 44.7% year-to-date share price return and a striking 98% total shareholder return over the past year, Pharming Group’s strong results and refreshed leadership are building real momentum. Investors are rewarding the combination of accelerating sales, a narrowing net loss, and the company’s ambitions to expand globally.

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With the stock rallying and guidance revised upwards, is Pharming Group’s valuation leaving room for further upside, or are investors already pricing in the next phase of its growth?

Price-to-Sales Ratio of 3x: Is it justified?

Pharming Group’s shares are trading at a price-to-sales (P/S) ratio of 3x, a level that stands out when set against its latest close at €1.39. Currently, the stock sits far below the P/S average for its biotech industry peers.

The price-to-sales multiple indicates how much investors are willing to pay for every unit of revenue. For biotech firms, this measure is critical as many companies are still scaling profits and reinvesting for growth. This makes pure earnings-based valuation less appropriate.

At 3x, Pharming Group’s P/S ratio signals that the market could be underestimating its revenue potential, especially considering the sector’s average ratio of 7.6x. This suggests the stock is attractively valued in absolute terms and relative to peers. Compared to the estimated fair P/S ratio of 5x, there might be room for the stock to rerate as growth expectations crystallize.

Explore the SWS fair ratio for Pharming Group

Result: Price-to-Sales of 3x (UNDERVALUED)

However, slower revenue growth or unexpected regulatory hurdles could challenge the recent bullish momentum and highlight the need for caution as the narrative evolves.

Find out about the key risks to this Pharming Group narrative.

Another View: What Does Our DCF Model Suggest?

While Pharming Group’s price-to-sales multiple points to undervaluation, our DCF model takes a more conservative approach by estimating the business’s future cash flows. According to this methodology, Pharming shares are trading significantly below our fair value estimate, which suggests even greater upside. Does this alternative perspective highlight a hidden opportunity, or are there risks that multiples do not capture?

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 Pharming Group 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 898 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Pharming Group Narrative

If you want to see the data from a different angle or dig deeper on your own, you can quickly build your personal thesis in just a few minutes. Do it your way

A great starting point for your Pharming Group research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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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.