Is Vanda Pharmaceuticals, Inc. overvalued or undervalued?

As of 8 May 2024, the valuation grade for Vanda Pharmaceuticals, Inc. has moved from expensive to risky, indicating a significant downgrade in its perceived value. The company is currently considered overvalued based on its financial metrics, particularly with a Price to Book Value of 0.53, an EV to EBIT of 0.89, and an EV to EBITDA of 1.00. Compared to peers, Vanda's valuation ratios are less favorable, with Lexicon Pharmaceuticals, Inc. showing a P/E of -3.5278 and an EV to EBITDA of -2.8670, highlighting a relative weakness in Vanda's financial standing.
The company's stock has underperformed significantly against the S&P 500, with a year-to-date return of -5.64% compared to the index's 12.22%, and a staggering decline of -54.62% over the past three years versus the S&P's 70.41% gain. This stark contrast reinforces the view that Vanda Pharmaceuticals is overvalued in the current market environment.