Is Rhythm Pharmaceuticals, Inc. overvalued or undervalued?

As of 2 November 2021, the valuation grade for Rhythm Pharmaceuticals, Inc. moved from does not qualify to risky, indicating a heightened level of uncertainty regarding its financial stability. The company appears to be overvalued given its significant negative financial metrics, including a Price to Book Value of 228.70, an EV to EBIT of -24.75, and an EV to EBITDA of -24.97. These ratios suggest that the company is struggling to generate positive earnings relative to its valuation.
In comparison to its peers, Rhythm Pharmaceuticals, Inc. has a P/E ratio of -36.41, which is significantly worse than Merus NV at -13.18 and CymaBay Therapeutics, Inc. at -35.38, highlighting its relative overvaluation in the market. Despite its strong year-to-date return of 76.03% compared to the S&P 500's 12.22%, this performance does not mitigate the concerns raised by its negative financial ratios, reinforcing the conclusion that the company is overvalued.