INVA - Innoviva: Potentially Overvalued

2024-06-21 08:30:00 ET

Summary

• Innoviva shares have increased by 25% in the past year, matching S&P 500 returns.
• Innoviva's financial snapshot shows revenue and net income growth, but interest expenses have increased significantly.
• Market assumptions suggest an optimistic growth rate of 14%, making INVA stock potentially overvalued.

It’s been exactly one year since I published my latest “avoid” piece on Innoviva, Inc. ( INVA ), and in that time the shares are up about 25%, which basically matches the return of the S&P 500 over the same time period. I thought I’d review the name yet again to see if what I deemed to be a poor investment at $12.90 is a good one at $16. I normally compare the dividend yield to the risk free rate in order to work out as much of the positive or negative risk premium as possible. That’s not an option in this case, though, so I’m stuck with my ratios, and working out the market’s assumptions currently embedded in price....

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