The market is too pessimistic about the approved VYVGART business after the Sjögren’s trial failure. Broader prescribing can support substantial earnings growth without revenue from another disease approval.
Key points
- 17% sales growth in 2027 supports today’s price under my valuation assumptions; I forecast 28%.
- 60% product-sales growth in Q2 2026 reflects an expanding approved business, not the stopped trial.
- 78% cash conversion in first-half 2026 warrants caution: operating cash flow trails reported earnings.
The call
The market is too pessimistic about commercial growth. At my assumed 26 times earnings, today’s price requires approximately $7.7 billion of 2027 product sales with my cost assumptions. The stock’s three-month underperformance of 12.9 percentage points against the market is contrary evidence, but does not demonstrate weakening prescriptions.
VYVGART sales keep growing without the stopped trial ($ millions)- Reported product sales
- My forecast: approved uses only
Sources: company quarterly releases, May 2024–July 2026; analyst forecasts as of October 8, 2026.
The approved business can carry the recovery. I forecast $8.4 billion of 2027 sales as broader myasthenia coverage and easier injections expand prescribing. I assume no revenue from unapproved diseases. The failed Sjögren’s study damages the expansion story, but disclosed no new safety signal; October’s earnings report will test commercial demand separately.
Valuation
| Driver | My estimate |
|---|
| 2027 product sales | $8.4 billion |
| 2027 operating margin | 37.4% |
| 2027 normalized tax rate | 22% |
| 2027 diluted share count | 65.5 million |
| 2027 underlying earnings per ADS | $39.18 |
| October 2027 target per ADS | $1,018.64 |
My forecast includes $2.6 billion of research costs, $1.9 billion of selling and administrative costs including stock awards, and $150 million of net financial income; underlying earnings exclude one-off tax and acquisition effects. The 26-times earnings multiple assigns the autoimmune franchise a $157-per-ADS premium over 22 times, vulnerable to higher rates or further trial failures. My weak buy record and the uncertainty around that premium argue against a stronger rating.
What the franchise premium is worth per ADSAnalyst scenarios, October 8, 2026; fixed 2027 underlying earnings forecast of $39.18 per ADS.
Risks
- Commercial adoption slows: watch quarterly sales growth and insurer coverage, not advertised cash prices.
- Further trials fail: watch the fourth-quarter motor-neuropathy results and the regulator’s myositis filing requirements.
- Earnings outrun cash: watch receivables, prepaid expenses and post-acquisition liquidity in October’s report.
What would change my mind
Two consecutive quarters through June 2027 with product-sales growth below 20% and operating margins below 32% would overturn my recovery forecast.