Is Avadel Pharmaceuticals Still Attractive After a 113.4% One Year Surge in 2025?

• If you are wondering whether Avadel Pharmaceuticals at around $21 a share still has room to run or is already priced for perfection, you are not alone. This breakdown is designed to give you a clear, valuation focused view.
• The stock has dipped about 0.7% over the last week, but it is still up 12.6% over the past month and 94.0% year to date, with a 113.4% gain over the last year shifting how the market thinks about its risk and reward profile.
• Much of that surge has been driven by growing investor confidence in Avadel's lead sleep medicine franchise and its commercial ramp, alongside positive sentiment around the broader biotech space that rewards companies with differentiated, late stage assets. At the same time, regulatory and competitive developments in the sleep disorder market have kept the stock on traders' radar as a higher conviction, but still volatile, healthcare play.
• Even after this strong run, Avadel screens as undervalued on 3 out of 6 of our key valuation checks. This gives it a current valuation score of 3/6 that we will unpack using multiple approaches before circling back to an even more powerful way to think about what the market is really pricing in.

Avadel Pharmaceuticals delivered 113.4% returns over the last year. See how this stacks up to the rest of the Pharmaceuticals industry.

Approach 1: Avadel Pharmaceuticals Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth by projecting the cash it can generate in the future and discounting those cash flows back to today in dollar terms.

For Avadel Pharmaceuticals, the 2 Stage Free Cash Flow to Equity model starts with last twelve month Free Cash Flow of about $10.8 million. Analyst estimates and Simply Wall St extrapolations then project Free Cash Flow rising to roughly $176.9 million by 2035, with notable steps along the way, such as about $80.1 million in 2026 and $144 million in 2029, all in dollars. These projected cash flows are discounted back to present value to reflect risk and the time value of money.

On this basis, the DCF model suggests an intrinsic value of about $32.36 per share. Compared with the current share price near $21, the model output indicates the stock could be roughly 34.1% below this estimated value.

Result: UNDERVALUED (per this DCF model)

Our Discounted Cash Flow (DCF) analysis suggests Avadel Pharmaceuticals is undervalued by 34.1%. Track this in your watchlist or portfolio, or discover 906 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Avadel Pharmaceuticals.

Approach 2: Avadel Pharmaceuticals Price vs Sales

For growing, commercial stage biopharma companies that are not yet valued on steady earnings, the Price to Sales ratio is often the cleanest way to compare what investors are paying for each dollar of current revenue. A higher multiple generally reflects stronger growth expectations and lower perceived risk, while more speculative or volatile names typically trade on lower, more cautious sales multiples.

Avadel currently trades on a Price to Sales ratio of about 8.41x, which is above the broader Pharmaceuticals industry average of roughly 3.98x but well below the peer group average near 30.80x, where some high growth, higher risk names reside. Simply Wall St’s proprietary Fair Ratio framework refines this comparison by estimating what a reasonable Price to Sales multiple should be, after factoring in Avadel’s growth outlook, profitability profile, industry, market cap and risk characteristics.

On this basis, Avadel’s Fair Ratio is 7.61x, only modestly below the current 8.41x trading level. This suggests the market is pricing in slightly richer expectations than the model, but not to an extreme degree.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Avadel Pharmaceuticals Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of Avadel Pharmaceuticals’ story with a financial forecast and a Fair Value estimate. A Narrative is your own storyline behind the numbers, where you spell out what you think will happen to Avadel’s revenue, earnings and margins, and then turn that into a Fair Value that you can compare with today’s share price to decide whether you see it as a buy, hold or sell. Narratives live inside Simply Wall St’s Community page, are easy to use for any investor, and automatically update when new news, earnings or deal developments change the outlook. For example, one investor might build a Narrative around strong LUMRYZ adoption, expansion into idiopathic hypersomnia and robust margins that supports a Fair Value comfortably above $20.94, while a more cautious investor might stress test concentration, litigation and acquisition risks and arrive at a Fair Value closer to or even below $16, and Narratives lets you see, compare and refine these perspectives in real time.

Do you think there's more to the story for Avadel Pharmaceuticals? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.