Argenx (ENXTBR:ARGX) Valuation Analysis: Assessing the Justification Behind Recent Share Price Momentum

The recent share price strength of Argenx (ENXTBR:ARGX) has sparked renewed interest among investors, with the stock trading near its 52-week high of $808.43 as of October 10, 2025, according to Morningstar. While the 51.15% total return over the past year, according to Morningstar, suggests robust momentum, the critical question remains: Is this valuation justified by fundamentals, or does it signal a compelling buying opportunity? A deep dive into the company's financials, valuation metrics, and market dynamics reveals a nuanced picture.

Financial Performance: A Foundation for Growth

Argenx's Q2 2025 results underscore its operational strength. The company reported earnings per share (EPS) of $3.74, surpassing the consensus estimate of $2.84, according to MarketBeat. Revenue surged to $866.79 million, outpacing the projected $776.82 million. These figures reflect strong demand for its therapeutic pipeline and effective cost management. Looking ahead, analysts project EPS to jump from $3.13 to $10.85 per share in the next 12 months-a 246.65% increase, according to MarketBeat-driven by the commercialization of key assets and expanding market share in oncology and autoimmune diseases.

Historically, Argenx's stock has exhibited mixed reactions to earnings beats. From 2022 to 2025, 11 instances of positive EPS surprises were recorded, but the 1-day average return after a beat was -1.84%, underperforming the benchmark by -1.96 percentage points, according to Stock Analysis. While immediate sell-the-news pressure often dominates, the win rate improves to 64% by day 30, suggesting that holding beyond short-term volatility may yield better outcomes, per Stock Analysis.

Valuation Metrics: Undervalued or Overhyped?

Despite the stock's recent gains, valuation metrics suggest it remains attractively priced. A discounted cash flow (DCF) analysis by Simply Wall St estimates Argenx's intrinsic value at €1935.60 per share, implying the stock is trading at a 64.6% discount to its fair value. While the trailing price-to-earnings (P/E) ratio of 38.08 appears elevated, it is close to the company's historical fair ratio of 35.6x, indicating alignment with long-term growth expectations (Stock Analysis). The forward P/E of 34.19 further suggests the market is not overpaying for future earnings, particularly given the projected EPS expansion.

Market Dynamics and Risk Considerations

Argenx's stock has exhibited notable volatility, with a 30-day return of 4.46%, according to Morningstar, and a beta of 0.04 (Stock Analysis), signaling lower volatility than the broader market. However, this muted beta could also imply slower growth potential compared to more aggressive peers. The company's balance sheet adds another layer of confidence: $3.93 billion in cash and $43.15 million in debt result in a net cash position of $3.89 billion, or $63.52 per share (Stock Analysis). This liquidity buffer provides flexibility for R&D investments or shareholder returns, further supporting long-term value creation.

That said, risks persist. The DCF model's intrinsic value calculation hinges on assumptions about future cash flows, which could be disrupted by regulatory delays or competitive pressures. Additionally, while the stock's 12-month return is impressive, the forward P/E and analyst projections (targeting $883.8 by year-end 2025 and $7,920.12 by 2029, per Morningstar) imply continued high growth expectations. Investors must weigh whether Argenx can sustain its current trajectory. Historical backtests also highlight that momentum from earnings beats often fades within 1–2 weeks, with modest mean-reversion observed beyond a month, according to Stock Analysis.

Conclusion: A Case for Strategic Entry

Argenx's recent share price momentum appears largely justified by its strong earnings performance, robust cash flow, and undervaluation relative to intrinsic value. The DCF analysis and forward-looking metrics suggest the stock has room to appreciate, particularly if the company meets its 2025 EPS targets. However, the high growth projections and reliance on future cash flow assumptions necessitate caution. For investors with a medium-term horizon and a tolerance for biotech sector risks, Argenx presents a compelling opportunity-provided they monitor execution risks and macroeconomic headwinds.