Rigel Pharmaceuticals (RIGL - Get Rating) surpassed EPS estimates by 18.5% for its 2022 third quarter. Moreover, the U.S. Food and Drug Administration approved its REZLIDHIA (olutasidenib) capsules for treating adult patients with relapsed or refractory (R/R) acute myeloid leukemia. REZLIDHIA is expected to be incredibly beneficial for patients with poor prognoses and is a solid addition to RIGL’s product portfolio.

RIGL shares soared on the news. They have gained 30.2% over the past month. However, RIGL has lost 67.1% year-to-date and 64.9% over the past year to close the last trading session at $0.87.

RIGL is trading cheap compared to its peers. Its forward EV/Sales of 1.26x is 68.1% lower than the industry average of 3.95x. Its forward Price/Sales of 1.69x is 61.1% lower than the industry average of 4.35x.

Here is what could shape RIGL’s performance in the near term:

Industry Tailwinds

Amid surging chronic diseases worldwide, demand is pretty overwhelming for the pharma industry. According to SkyQuest Technology Consulting Pvt. Ltd., the global pharmaceuticals market is expected to reach a massive value of $14.07 trillion in 2028.

Moreover, investors’ interest in pharma stocks is evident from the iShares U.S. Pharmaceuticals ETF’s (IHE) 4.8% gains over the past month. Such a positive outlook of the pharma industry is expected to bode well for RIGL.

Improving Financials

RIGL’s net product sales came in at $19.19 million for the third quarter that ended September 30, 2022, up 19.8% year-over-year. Its total revenues came in at $22.41 million, up 4% year-over-year.

Moreover, its net loss came in at $19.04 million, down 9.1% year-over-year, while its loss per share came in at $0.11, down 8.3% year-over-year.

Favorable Analyst Expectations

RIGL’s revenue is expected to increase 6.1% year-over-year to $21.65 million for the quarter ending December 2022 and 156.2% year-over-year to $42.87 million for the quarter ending March 2023. Its revenue is expected to rise 32.2% year-over-year to $120.65 million in 2023.

Also, its EPS is expected to rise 87.5% year-over-year for the quarter ending March 2023 and 48% year-over-year in 2023. Moreover, its EPS is expected to increase by 70% per annum for the next five years. Wall Street analysts expect the stock to hit $5.25 in the near term, indicating a potential upside of 501.4%.

POWR Ratings Reflect Promising Outlook

RIGL has an overall rating of B, which equates to a Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. RIGL has a B grade for Value and Growth, consistent with its lower-than-industry valuation multiples and financial growth for the 2022 third quarter, respectively.

In the 160-stock Medical – Pharmaceuticals industry, RIGL is ranked #37.

Click here for the additional POWR Ratings for RIGL (Momentum, Stability, Sentiment, Quality).

View all the top stocks in the Medical – Pharmaceuticals industry here.

Bottom Line

RIGL witnessed significant improvement in its top and bottom line in its last reported quarter. Moreover, it is trading above its 50-day moving average of $0.83. Given the pharma industry’s favorable outlook and RIGL’s optimistic growth estimates, I think it might be an ideal buy now.

How Does Rigel Pharmaceuticals, Inc. (RIGL) Stack up Against Its Peers?

While RIGL has an overall POWR Rating of B, one might consider looking at its industry peers, Novo Nordisk A/S (NVO - Get Rating), Pfizer Inc. (PFE - Get Rating), and Bristol-Myers Squibb Company (BMY - Get Rating), which have an overall A (Strong Buy) rating.

RIGL shares rose $0.01 (+0.81%) in premarket trading Monday. Year-to-date, RIGL has declined -67.17%, versus a -16.24% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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