<div id="readability-page-1"><div><h3>Key Insights</h3><ul><li> The projected fair value for Rigel Pharmaceuticals is US$39.23 based on 2 Stage Free Cash Flow to Equity </li> <li> Current share price of US$30.28 suggests Rigel Pharmaceuticals is potentially 23% undervalued </li> <li>  Analyst price target for RIGL is US$38.33 which is 2.3% below our fair value estimate </li> </ul><p>Today we will run through one way of estimating the intrinsic value of Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) by taking the expected future cash flows and discounting them to today's value.  Our analysis will employ the Discounted Cash Flow (DCF) model.  Don't get put off by the jargon, the math behind it is actually quite straightforward.</p><p> Remember though, that there are many ways to estimate a company's value, and a DCF is just one method.  If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. </p><p>We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.</p><h2> The Method </h2> <p> We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase.  To begin with, we have to get estimates of the next ten years of cash flows.   Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.  </p><p> A DCF is all about the idea that a dollar in the future is less valuable than a dollar today,  and so the sum of these future cash flows is then discounted to today's value: </p><h4> 10-year free cash flow (FCF) forecast </h4><table><tbody><tr><td> </td><td><strong>2026</strong></td><td><strong>2027</strong></td><td><strong>2028</strong></td><td><strong>2029</strong></td><td><strong>2030</strong></td><td><strong>2031</strong></td><td><strong>2032</strong></td><td><strong>2033</strong></td><td><strong>2034</strong></td><td><strong>2035</strong></td></tr><tr><td><strong> Levered FCF ($, Millions) </strong></td><td>US$34.0m</td><td>US$50.0m</td><td>US$31.0m</td><td>US$33.0m</td><td>US$31.9m</td><td>US$31.5m</td><td>US$31.5m</td><td>US$31.8m</td><td>US$32.3m</td><td>US$32.9m</td></tr><tr><td><strong>Growth Rate Estimate Source</strong></td><td>Analyst x1</td><td>Analyst x1</td><td>Analyst x1</td><td>Analyst x1</td><td>Est @ -3.24%</td><td>Est @ -1.35%</td><td>Est @ -0.02%</td><td>Est @ 0.91%</td><td>Est @ 1.56%</td><td>Est @ 2.02%</td></tr><tr><td><strong> Present Value ($, Millions) Discounted @ 6.9% </strong></td><td>US$31.8</td><td>US$43.8</td><td>US$25.4</td><td>US$25.3</td><td>US$22.9</td><td>US$21.1</td><td>US$19.8</td><td>US$18.7</td><td>US$17.7</td><td>US$16.9</td></tr></tbody></table><p><i>(&#34;Est&#34; = FCF growth rate estimated by Simply Wall St)</i><br/><strong>Present Value of 10-year Cash Flow (PVCF)</strong> = US$243m</p><p> After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage.  For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (3.1%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 6.9%. </p><p><strong>Terminal Value (TV)</strong>= FCF<sub>2035</sub> × (1 + g) ÷ (r – g) = US$33m× (1 + 3.1%) ÷ (6.9%– 3.1%) = US$895m</p><p><strong>Present Value of Terminal Value (PVTV)</strong>= TV / (1 + r)<sup>10</sup>= US$895m÷ ( 1 + 6.9%)<sup>10</sup>= US$460m</p><p> The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value,  which in this case is US$704m.  To get the intrinsic value per share, we divide this by the total number of shares outstanding.  Relative to the current share price of US$30.3, the company appears   a touch undervalued    at a 23% discount to where the stock price trades currently.   The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. </p><figure><img height="760" src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/33851-dcf-1-dark-2/1758795856210?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="1706" original-src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/33851-dcf-1-dark-2/1758795856210"/><figcaption>NasdaqGS:RIGL Discounted Cash Flow September 25th 2025</figcaption></figure> <h2> Important Assumptions </h2><p> The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows.  If you don't agree with these result, have a go at the calculation yourself and play with the assumptions.  The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance.  Given that we are looking at Rigel Pharmaceuticals as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt.  In this calculation we've used 6.9%, which is based on a levered beta of 0.821. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. </p> <p><span> Check out our latest analysis for Rigel Pharmaceuticals </span></p><h3>SWOT Analysis for Rigel Pharmaceuticals</h3><div><div><p><strong>Strength</strong></p><ul><li>Debt is not viewed as a risk.</li></ul> <ul>Balance sheet summary for RIGL.</ul> </div><div><p><strong>Weakness</strong></p><ul><li> No major weaknesses identified for RIGL.</li></ul></div><div><p><strong>Opportunity</strong></p><ul><li>Good value based on P/E ratio and estimated fair value.</li></ul> </div><div><p><strong>Threat</strong></p><ul><li>Annual earnings are forecast to decline for the next 3 years.</li></ul> <ul> What else are analysts forecasting for RIGL?</ul> </div></div><h2> Looking Ahead: </h2><p> Valuation is only one side of the coin in terms of building your investment thesis, and it  shouldn't be the only metric you look at when researching a company.  The DCF model is not a perfect stock valuation tool.  Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation.  For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result.   Can we work out why the company is trading at a discount to intrinsic value?   For Rigel Pharmaceuticals, there are three  essential  aspects  you should further examine: </p><ol> <li> <strong>Risks</strong>: Be aware that  Rigel Pharmaceuticals is showing <strong> 2 warning signs in our investment analysis</strong> , you should know about...  </li> <li><strong>Future Earnings</strong>: How does RIGL's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.</li><li> <strong>Other High Quality Alternatives</strong>: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! </li> </ol><p>PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here.</p></div></div>

RIGL

<p>Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) is currently trading at $30.28, suggesting a potential 23% undervaluation compared to its projected fair value of $39.23. Analysts have set a price target of $38.33 for the stock. The valuation is based on a Discounted Cash Flow (DCF) model, which estimates future cash flows and discounts them to present value. The total equity value calculated is $704 million, indicating that the stock is undervalued relative to its intrinsic value. However, the valuation is sensitive to assumptions regarding discount rates and cash flow estimates.</p>

Is Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) Trading At A 23% Discount?