Is XOMA Corp. overvalued or undervalued?

As of 9 March 2023, the valuation grade for XOMA Corp. has moved from attractive to risky, indicating a shift in perception regarding its financial health. The company appears to be overvalued, particularly given its Price to Book Value of 3.57, an EV to EBIT of -11.91, and an EV to EBITDA of -12.26, which suggest significant operational challenges. In comparison, peers such as Fusion Pharmaceuticals, Inc. report a P/E of -17.58 and Gossamer Bio, Inc. has a P/E of -4.38, highlighting that XOMA's valuation metrics are not competitive within its industry.
Despite the overvaluation, XOMA Corp. has shown strong returns, with a year-to-date return of 43.04% compared to the S&P 500's 12.22%, and a three-year return of 108.83% versus the S&P 500's 70.41%. However, the negative operational ratios and the recent downgrade in valuation grade suggest caution for potential investors.