Ligand Pharmaceuticals Incorporated Common Stock (LGND)
Fast GrowerFairStock Score: 46/100 — MIXED
Key Financials
| Current Price | $213.21 |
| Market Cap | $4.6B |
| P/E Ratio | 27.76 |
| ROE | 17.13% |
| Dividend Yield | —% |
| Sector | Healthcare |
Strengths
- Generates $87 million in annual free cash flow (1.9% yield on market cap)
- Solid return on equity of 13.5% above cost of capital
- Conservative balance sheet with debt-to-equity of just 0.44, providing financial flexibility
- Altman Z-Score of 6.3 confirms minimal bankruptcy risk and strong solvency
- Healthy net profit margin of 16.7% showing consistent profitability
Concerns
- Trades significantly above Graham Number ($84) with negative 171% margin of safety—limited downside protection
AI Analysis
Ligand Pharmaceuticals Incorporated Common Stock is a small-cap healthcare company valued at $4.6 billion. The business generates $268 million in annual revenue with a 16.7% net margin and $87 million in free cash flow. From a quality standpoint, Ligand shows Altman Z-Score of 6.3 confirms fortress-level solvency and adequate 13% ROE. On valuation, the stock is trading at a premium 37.3x earnings, with trades far above its Graham Number ($84) with no margin of safety. Growth dynamics show revenue growing at 39.4% and profit growth of 244.1%. Our composite FairStock Score of 46/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.
Bull Case
Ligand's 39% revenue growth trajectory could accelerate as it captures additional market share in the healthcare sector. With $87 million in annual free cash flow (1.9% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.
Bear Case
At 37x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.
Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer