07-07-2025
Is JAZZ Stock Undervalued At $110?
POLAND - 2025/02/22: In this photo illustration, the Jazz Pharmaceuticals company logo is seen ... More displayed on a smartphone screen. (Photo Illustration by Piotr Swat/SOPA Images/LightRocket via Getty Images) SOPA Images/LightRocket via Getty Images
Jazz Pharmaceuticals (NASDAQ: JAZZ) is currently trading at approximately $110, having decreased by 11% year-to-date, even after a significant positive development with the conditional European Commission Marketing Authorization for Ziihera (zanidatamab) aimed at advanced HER2-Positive Biliary Tract Cancer. Ziihera is the first HER2-targeted therapy approved in the EU for this condition, with anticipated peak annual sales surpassing $2 billion. The stock's poor performance can primarily be linked to a revised earnings forecast for 2025, which has been adjusted downward from $22.50-$24 to $4-$5.60, due to a $1.1 billion impact from one-time IPR&D charges associated with the $935 million Chimerix acquisition along with some litigation costs. Despite this, we consider Jazz Pharmaceuticals to be undervalued at $110, offering an attractive buying opportunity for investors with a 3-5 year investment outlook. That being said, if you are looking for upside potential with less volatility compared to individual stocks, the Trefis High-Quality portfolio offers an alternative, having outperformed the S&P 500 and generated returns over 91% since its inception. Additionally, see – Should You Buy Oscar Health Stock At $17? Trailing Adjusted P/E: At $110, Jazz trades at only 5.5 times its trailing adjusted earnings of $20.19 per share, which is well below its four-year average P/E ratio of 8.1x. For further valuation metrics, examine – Jazz Pharmaceuticals Valuation Ratios.
At $110, Jazz trades at only 5.5 times its trailing adjusted earnings of $20.19 per share, which is well below its four-year average P/E ratio of 8.1x. For further valuation metrics, examine – Jazz Pharmaceuticals Valuation Ratios. Future Earnings Potential: While 2025 earnings will be affected by one-off costs, 2026 earnings are anticipated to bounce back to $21.56.
While 2025 earnings will be affected by one-off costs, 2026 earnings are anticipated to bounce back to $21.56. Pipeline Contribution: The Chimerix acquisition introduces dordaviprone to the oncology portfolio, with a peak annual sales potential over $500 million.
The Chimerix acquisition introduces dordaviprone to the oncology portfolio, with a peak annual sales potential over $500 million. Analyst Consensus: The typical analyst price forecast of $188 suggests a substantial upside potential of 70%. High Debt Load: Jazz Pharmaceuticals has a considerable debt level of $5.4 billion with a market capitalization of $6.7 billion (as of July 3, 2025), leading to a Debt-to-Equity Ratio of 81.6%, which is significantly above the S&P 500 average of 19.4%. A lower debt-to-equity ratio is generally preferred.
Jazz Pharmaceuticals has a considerable debt level of $5.4 billion with a market capitalization of $6.7 billion (as of July 3, 2025), leading to a Debt-to-Equity Ratio of 81.6%, which is significantly above the S&P 500 average of 19.4%. A lower debt-to-equity ratio is generally preferred. Historical Underperformance in Downturns: Historically, the stock has performed worse than the S&P 500 during market declines, such as the 2022 inflation shock (JAZZ down 38.7% versus S&P 500 down 25.4%) and the 2020 crisis (JAZZ down 42.6% versus S&P 500 down 33.9%). The stock has also yet to return to its pre-inflation crisis levels. Our dashboard on Buy or Sell JAZZ Stock has more details.
Historically, the stock has performed worse than the S&P 500 during market declines, such as the 2022 inflation shock (JAZZ down 38.7% versus S&P 500 down 25.4%) and the 2020 crisis (JAZZ down 42.6% versus S&P 500 down 33.9%). The stock has also yet to return to its pre-inflation crisis levels. Our dashboard on Buy or Sell JAZZ Stock has more details. Slowing Oncology Portfolio Growth: There are specific concerns about a potential slowdown in the growth of the oncology portfolio.
Despite the recent revisions to earnings and existing debt concerns, Jazz Pharmaceuticals offers a compelling value proposition. Its robust underlying fundamentals, appealing valuation metrics, and significant future sales potential from Ziihera and dordaviprone indicate that the current stock price does not adequately reflect its intrinsic value. While investors should remain aware of the substantial debt and historical sensitivity to market downturns, the long-term prospects for Jazz Pharmaceuticals seem positive for those with a 3-5 year investment horizon. However, there is always a significant risk associated with investing in a single stock or just a few stocks. Consider the Trefis High Quality (HQ) Portfolio which comprises 30 stocks and has a proven track record of consistently outperforming the S&P 500 over the past four years. Why is that? On the whole, HQ Portfolio stocks delivered superior returns with lower risk as compared to the benchmark index; experiencing less volatility, as evidenced by HQ Portfolio performance metrics .
