A Look At Erasca (ERAS) Valuation After Its Upsized Follow On Equity Offering

Simply Wall St.07:15

AdvertisementWhy Erasca’s latest equity raise matters for current and prospective shareholders Erasca (ERAS) has closed an upsized follow on equity offering, raising about US$225 million by selling 22...

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The 1 year total...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4539":"次新股","BK4585":"ETF&股票定投概念","EQR":"资产住宅公司","ERAS":"Erasca, INC.","BK4139":"生物科技","BK4215":"住宅房地产投资信托","BK4588":"碎股"},"translate_title":"Erasca(ERAS)在股票发行后扩大规模后的估值一览","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ERAS":1.5,"EQR":1.5},"content_text":"AdvertisementWhy Erasca’s latest equity raise matters for current and prospective shareholders Erasca (ERAS) has closed an upsized follow on equity offering, raising about US$225 million by selling 22,500,000 common shares at US$10.00, a move that directly affects existing and future shareholders. See our latest analysis for Erasca. The equity raise comes after a sharp re-rating in the stock, with a 30 day share price return of 186.21% and a year to date share price return of 177.44%. The 1 year total shareholder return of 410.77% indicates strong momentum that has extended beyond pure price moves. If Erasca’s recent move has you rethinking where growth could come from next, it might be a good time to scan other specialised healthcare stocks for fresh ideas. With Erasca now funded for more R&D and the share price already posting strong recent returns, the key question is whether the current valuation leaves further upside on the table, or if the market is already pricing in future growth. Preferred Price-to-Book of 8.9x: Is it justified? On a P/B of 8.9x, Erasca trades at a markedly richer level than both the broader US biotechs industry and its closer peer group, despite generating no revenue today. P/B compares a company’s market value to its net assets. It is often used for early stage or unprofitable biotechs where earnings based P/E metrics are not yet meaningful. In Erasca’s case, the 8.9x figure reflects how much investors are currently willing to pay for each dollar of book value, even as the company reports a net loss of $127.686 million and is forecast to remain unprofitable over the next 3 years. Relative pricing is stark. The US biotechs industry sits at an average P/B of 2.7x, and Erasca’s peer average is 6.1x. The current 8.9x level stands well above both benchmarks. With no meaningful revenue yet, forecasts showing no revenue next year, and losses that have increased at 3.9% per year over the past 5 years, the market appears to be assigning a premium mainly to the pipeline and management profile rather than present financials. See what the numbers say about this price — find out in our valuation breakdown. Result: Price-to-book of 8.9x (OVERVALUED) However, there are clear risks here, including Erasca’s ongoing US$127.686 million loss and reliance on multiple clinical trial outcomes that may not meet expectations. Find out about the key risks to this Erasca narrative.  Build Your Own Erasca Narrative If this interpretation does not match how you see the data, you can stress test the numbers yourself and build a custom view in minutes with Do it your way. A great starting point for your Erasca research is our analysis highlighting 3 important warning signs that could impact your investment decision. Looking for more investment ideas? If Erasca has sharpened your focus on risk and reward, do not stop here. Widen your watchlist with a few focused stock idea sets.  Spot potential turnaround names early by reviewing these 3523 penny stocks with strong financials that pair smaller market caps with stronger balance sheets and fundamentals than you might expect. Explore the long term shift toward automation and data driven tools by scanning these 23 AI penny stocks that are shaping everything from enterprise software to next generation platforms. Put income at the center of your plan by checking out these 13 dividend stocks with yields > 3% that currently offer yields above 3% and have established payout profiles.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    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\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.Valuation is complex, but we're here to simplify it.Discover if Erasca might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.Access Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. 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