Is Summit Therapeutics, Inc. overvalued or undervalued?

As of 9 November 2022, the valuation grade for Summit Therapeutics, Inc. moved from risky to does not qualify, indicating a significant deterioration in its financial standing. The company is currently overvalued, with a Price to Book Value ratio of 44.41 and an EV to EBIT of -63.40, reflecting its loss-making status. Additionally, the Return on Equity (ROE) stands at a concerning -65.56%, which further underscores the challenges the company faces.
In comparison to its peers, Summit Therapeutics, Inc. shows a stark contrast; for instance, Merus NV has a P/E ratio of -14.25 and an EV to EBITDA of -11.71, while Rhythm Pharmaceuticals, Inc. has a P/E of -22.45 and an EV to EBITDA of -22.69. These ratios highlight that Summit is not only underperforming relative to its peers but also lacks a viable valuation framework. Despite recent strong stock performance against the S&P 500, with a 1-year return of 157.12% compared to the index's 10.26%, the underlying financial metrics suggest that the stock is not justified at its current price level.