Is Graphite Bio, Inc. overvalued or undervalued?

As of 30 July 2025, the valuation grade for Graphite Bio, Inc. has moved from does not qualify to risky, indicating increased concerns about its financial health. The company appears to be overvalued given its significant negative metrics, including a price-to-book value of 4.58 and a return on equity of -24.86%. Additionally, the EV to EBITDA ratio stands at -11.54, highlighting the challenges in generating positive earnings.
In comparison to its peer, Stoke Therapeutics, Inc., which has a fair valuation with a P/E ratio of 22.96 and an EV to EBITDA of 21.50, Graphite Bio's ratios suggest a less favorable position in the market. Despite this, Graphite Bio has shown strong stock performance, with a year-to-date return of 44.41% compared to the S&P 500's 12.22%, and a one-year return of 93.91% versus the S&P 500's 17.14%. This strong performance may not be sustainable given the underlying financial metrics, reinforcing the view that the stock is overvalued.