Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide.
-
This article looks at whether Revolution Medicines, at around US$142.51, still offers value or if most of the opportunity is already reflected in the current price, and what that price might represent for you.
-
The stock has moved sharply in recent periods, with a 48.0% return over 30 days, 80.3% year to date, and 240.0% over the last year. However, the latest 7-day return shows a 1.1% decline.
-
Recent attention around Revolution Medicines has centered on its position in the pharmaceuticals and biotech space, as investors reassess how its pipeline and business profile compare with peers. That renewed focus may help explain why the share price has seen such pronounced moves over the past year.
-
Right now the company has a value score of 2 out of 6. The sections ahead will compare different valuation methods to that score, then conclude with a way of looking at valuation that can put all these pieces into clearer context.
Revolution Medicines scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Revolution Medicines Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a stock could be worth by projecting future cash flows from the business and discounting them back to today using a required rate of return.
For Revolution Medicines, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month free cash flow is a loss of $1,071.73 million. Analysts provide estimates for the next few years and Simply Wall St then extrapolates further, with ten year projections ranging from a loss of $1,443.50 million in 2026 to positive free cash flow of up to $6,323.38 million by 2035 in undiscounted terms.
After discounting these projected cash flows back to today, the model arrives at an estimated intrinsic value of about $497.07 per share. Compared with the current share price of about $142.51, this implies the stock is 71.3% undervalued based on this DCF framework.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Revolution Medicines is undervalued by 71.3%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.
RVMD Discounted Cash Flow as at May 2026
Approach 2: Revolution Medicines Price vs Book
For companies in earlier stages or with limited profitability, price-based multiples such as P/B can be a useful way to think about what the market is paying relative to the underlying net assets. A higher multiple can reflect expectations for stronger future growth, but it can also reflect higher risk, so there is no single “right” level for all stocks.
Story Continues
Revolution Medicines currently trades at a P/B of 20.20x. This sits well above the broader Biotechs industry average P/B of 2.39x and the peer group average of 10.10x. On the surface, that indicates the stock is priced well above what investors are paying for many similar companies on a book value basis.
Simply Wall St’s Fair Ratio metric goes a step further by estimating what a “normal” P/B might look like for Revolution Medicines specifically, based on factors such as earnings growth expectations, profit margins, industry, market value and risk profile. Because it is tailored to the company rather than a broad group, the Fair Ratio can be more informative than a simple comparison with peers or the sector. With the Fair Ratio currently not available, it is not possible to judge directly whether the current 20.20x P/B points to under, over, or roughly fair pricing on this framework.
Result: ABOUT RIGHT
NasdaqGS:RVMD P/B Ratio as at May 2026
P/B ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 18 top founder-led companies.
Upgrade Your Decision Making: Choose your Revolution Medicines Narrative
Earlier it was mentioned that there is an even better way to understand valuation, so Narratives step in as a simple story you create about Revolution Medicines that links its RAS focused pipeline, your assumptions for future revenue, earnings and margins, and your own estimate of fair value. You can then compare that fair value with the current price to help you decide whether the stock looks attractive or not right now.
On Simply Wall St’s Community page, Narratives are set up so you can plug in different views. For example, one investor might lean toward the higher US$170.00 fair value that assumes revenue could reach about US$2.1b and earnings about US$424.4m by 2029, while another might align with the lower US$73.00 to US$92.22 range that ties to revenue of around US$463.7m and earnings of about US$58.0m. As fresh information such as trial results, expenses or guidance comes through, these Narratives update automatically so your story and numbers stay in sync without extra work.
For Revolution Medicines, however, we will make it really easy for you with previews of two leading Revolution Medicines Narratives:
🐂 Revolution Medicines Bull Case
Fair value: US$170.00
Implied discount to this fair value: about 16.2% undervalued versus the recent US$142.51 share price
Illustrative revenue growth assumption to 2029: 1,184.41%
-
Targets a scenario where Revolution Medicines converts a broad RAS focused late stage pipeline into commercial products across several tumor types, with revenue reaching US$2.1b and earnings of US$424.4m by 2029.
-
Assumes investors are willing to pay a P/E of 117.4x on those 2029 earnings, well above the current US Biotechs industry P/E of 21.2x, in return for that growth and RAS oncology focus.
-
Highlights that the company’s US$2.03b cash and investments, plus access to up to US$2b from Royalty Pharma, support heavy R&D and commercial build out, but also flags clinical, execution and concentration risks that could challenge this upbeat path.
🐻 Revolution Medicines Bear Case
Fair value: US$133.70
Implied premium to this fair value: about 6.6% overvalued versus the recent US$142.51 share price
Illustrative revenue growth assumption to 2029: 902.29%
-
Frames a more conservative path with analysts expecting revenue to reach US$1.0b by 2029 and earnings of US$148.6m if margins rise toward the US Biotechs industry average of 14.8%.
-
Points out that to justify the US$133.70 consensus target on those earnings, the stock would need to trade on a P/E of 263.8x, far above the industry’s 14.9x, which sets a high bar for future execution.
-
Emphasizes the risks of a single therapy area focus in RAS driven cancers, heavy 2026 operating expense guidance of US$1.6b to US$1.7b and dependence on late stage trials and partnerships, all of which could restrict how much of the pipeline ultimately converts into sustainable earnings.
If you want to see the full reasoning behind both sides and how other investors are framing the range between these views, it is worth reading the complete set of Narratives for Revolution Medicines, including community contributions and updates over time, in one place through the Simply Wall St community tools. You can start with these two previews and the See what the community is saying about Revolution Medicines.
Do you think there’s more to the story for Revolution Medicines? Head over to our Community to see what others are saying!
NasdaqGS:RVMD 1-Year Stock Price Chart
This article by Simply Wall St is general in nature. We provide commentary based on historical data 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 financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include RVMD.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com