Is Prothena Corp. Plc overvalued or undervalued?

As of 8 August 2022, Prothena Corp. Plc's valuation grade changed from fair to risky, indicating a shift towards a more cautious outlook. The company is currently overvalued based on its financial metrics, particularly given its negative return on equity of -25.19% and a price to book value ratio of 0.67, which suggests that the market is pricing the stock higher than its underlying assets justify. Additionally, the EV to EBITDA ratio stands at 0.92, reflecting a concerning valuation relative to its earnings potential.
In comparison to its peers, Prothena's valuation appears unfavorable; for instance, its peer has a P/E ratio of -1.69 and an EV to EBITDA of -0.36, highlighting a stark contrast in financial health. The absence of positive earnings further complicates the valuation picture, reinforcing the notion that the stock is overvalued. Although specific return data is not available, the lack of positive returns compared to the S&P 500 likely supports the view that the stock is not performing favorably in the market.