Pharma Mar Stock Outlook: A Path to 40% Returns

Key Takeaways:

• Explosive Growth: Pharma Mar (PHM) is seeing a “fantastic” global uptake of its cancer drug Zepzelca, with royalties from the U.S. jumping 2.5x and a successful launch in China.
• Price Projection: Our model projects the stock could surge to €106 per share by December 2027.
• Expected Returns: This target implies a stellar 17.4% annualized return, making it a compelling opportunity for growth-focused investors.
• Profit Turnaround: The company has swung from a loss to a solid €25.1 million EBITDA, driven by high-margin license payments and royalty streams.

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Pharma Mar (PHM) is transforming from a research-heavy biotech into a global commercial powerhouse.

The Spanish oncology leader recently reported a massive turnaround in profitability. First-half EBITDA reached €25.1 million, a stark contrast to the negative €0.8 million recorded in the same period last year.

The driver? Its flagship drug, Zepzelca (lurbinectedin), is used to treat small-cell lung cancer.

The drug is gaining traction worldwide. In the U.S., royalties from partner Jazz Pharmaceuticals skyrocketed 2.5x to €5.4 million. In China, partner Luye Pharma executed a “fantastic” launch, and in Japan, a new licensing deal with Merck brought in an upfront payment of €22 million.

With the stock currently trading around €76, the market may be underestimating the value of these high-margin royalty streams.

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What the Model Says for PHM Stock

We evaluated Pharma Mar’s potential through 2027, factoring in the global ramp-up of Zepzelca and the highly profitable nature of license income.

Our model screams “Opportunity.” Using a forecast of 27.8% Revenue Growth (CAGR) and 35.6% Operating Margins, the model projects the stock could climb to €106 by the end of 2027.

This implies a 17.4% annualized return over the next two years.

Unlike typical biotechs that burn cash, Pharma Mar is entering a phase of rapid earnings expansion, which could drive significant multiple expansion.

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Our Valuation Assumptions

TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.

Here’s what we used for PHM stock:

1. Revenue Growth (CAGR): 6.8%

Pharma Mar is hitting a revenue inflection point.

Total revenues recently grew 18%, but the “License Income” segment exploded by 80% due to the Merck deal for Japan.

We expect this momentum to accelerate as:

1. China sales ramp up following the recent launch.
2. Europe sees continued volume growth (+12% in unit sales despite generic competition for older drugs).
3. The U.S. royalties continue to compound as Jazz Pharmaceuticals expands market share.

We forecast aggressive revenue growth of 27.8% CAGR through 2027 as these territories mature.

2. Operating Margins: 35.6%

As Pharma Mar shifts its revenue mix toward royalties and milestones from partners like Jazz and Merck, its margin profile improves dramatically.

Net profit has already jumped 5x to €19.4 million in the first half of 2025. Management noted that R&D expenses are stable, meaning additional revenue flows directly to the bottom line.

We project operating margins will expand to 35.6%, reflecting this high-leverage business model.

3. Exit P/E Multiple: 12.6x

Despite the explosive growth, the stock trades at a reasonable valuation.

Our model assumes an exit P/E of 12.6x by 2027.

We chose a multiple that is slightly lower than where high-growth biotechs typically trade to ensure we have a built-in margin of safety. This accounts for the inherent risks of clinical trials (specifically the IMforte trial results) and patent cliffs for older drugs like Yondelis. Even with this conservative number, the earnings growth drives the share price significantly higher.

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What Happens If Things Go Better or Worse?

The risk-to-reward ratio looks highly favorable, with even the “Low” case offering positive returns (these are estimates, not guaranteed returns):

• Low Case: If clinical trials face setbacks or royalty growth slows, the stock could still deliver a 9.3% annual return.
• Mid Case: If the global rollout continues as planned, we project a compelling 15.2% annual return.
• High Case: If the IMforte trial data is strong and leads to earlier approvals, returns could skyrocket to 21.0% annual return.

See what analysts think about PHM stock right now (Free with TIKR) >>>

How Much Upside Does Pharma Mar Have From Here?

With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.

All it takes is three simple inputs:

1. Revenue Growth
2. Operating Margins
3. Exit P/E Multiple

If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.

From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!