Krystal Biotech, Inc. (KRYS): what the price assumes

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/KRYS

Headline

Field	Value
Ticker	KRYS
Company	Krystal Biotech, Inc.
Current price	$358.34/sh

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Operating margin (value-band context)	42.0%
Operating margin today	42.8%
Margin compression (value-band)	-0.8pp
Must persist for	14.0y
Multiple paid	56x operating income

The operating-margin figure is value-band context at year 5: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 10.8% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.3 years.

Reconcile: at the x-ray's 9.3% required return this reads ~10.7 years; the models below use their own rates.

How unusual the bet is: high

Reference	Value
cohort percentile (of 116 peers)	95
sustained it ~10 years at this level	14%
implied end-window share	0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	4.20x	5	expensive
Earnings	3.47x	4	expensive
Relative	1.49x	5	expensive
Growth	0.94x	3	justifies

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.

Per-Model Detail (n=17)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$380.72	0.94x	yes	FCF base $0.3B, growth 25% (input: historical growth), terminal g 4.0%, WACC 9.2%, 7yr projection
DCF Exit Multiple	Growth	$421.57	0.85x	yes	Exit EV/EBITDA: 50.9x / 52.9x / 54.9x (bear / base = today's held flat / bull), 7yr
Relative Valuation	Relative	$239.78	1.49x	yes	P/E 30.88x (blended: static sector reference 24x + trailing (TTM) 47x), scenarios: 24.8x / 30.9x / 37.0x (bear / base = reference held flat / bull), EV/EBITDA 27.06x
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	—	—	no	—
Simple Excess Return	Asset	$82.52	4.34x	yes	BV/sh $43.31, ROE (TTM) 17.6%, ke 9.3%
Two-Stage Excess Return	Asset	$112.45	3.19x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$221.30	1.62x	yes	Rev $0.4B, growth 26% (input: historical growth; tapered), Terminal P/S: 9.6x / 12.0x / 14.4x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair Value	Relative	$261.45	1.37x	yes	EPS $7.47, growth 35% (input: historical EPS growth), PEG=1.34 (Fair)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	—	—	no	—
Residual Income	Asset	$112.28	3.19x	yes	BV $43.31 + 5yr PV of (ROE (TTM) 17.6% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham Number	Asset	$85.32	4.20x	yes	√(22.5 × EPS $7.47 × BVPS $43.31) — Graham's conservative floor
EV/EBITDA Relative	Relative	$127.41	2.81x	yes	EBITDA $0.18B × sector EV/EBITDA 16.0x
FCF Yield	Earnings	$114.25	3.14x	yes	FCF $237.4M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$94.21	3.80x	yes	SBC-adj FCF $0.18B (FCF $0.24B − SBC $0.05B) capitalized at Kₑ
Ben Graham Formula	Earnings	$241.03	1.49x	yes	EPS $7.47 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	$48.24	7.43x	yes	BV $43.31 × (ROIC 10.3% / WACC 9.2%)
P/Sales Sector	Relative	$56.62	6.33x	yes	Revenue $0.42B × sector P/S 4.0x
PEG Fair Value	Relative	$280.13	1.28x	yes	EPS $7.47 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings Yield	Earnings	$80.76	4.44x	yes	EPS $7.47 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net cash	$823.4m
Net debt / NOPAT (after-tax)	-5.06x (net cash)
Net debt / operating income (pre-tax)	-4.61x (net cash)
Share count CAGR (dilution)	5.0%
Burning cash	no

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Krystal is the rare biotech that is already profitable, selling Vyjuvek, an approved gene therapy for a rare skin disease, at a 95% gross margin and funding a deep pipeline out of its own cash rather than dilutive raises.
• The price is the issue, not the business: at roughly 57 times operating income it embeds something like fourteen years of ceiling-rate growth, a durability bet only a small fraction of fast-growers have ever delivered.
• Watch the pipeline readouts: management expects multiple data readouts before year-end, including registrational dry-eye trials and early cystic fibrosis and oncology data, and each one is a binary event that widens or narrows the runway the price is paying for.

Bull Case

Valuing a biotech is uniquely hard because the standard cash-flow models systematically undervalue a pipeline of binary outcomes, and Krystal is the case where that gap matters most, because it has already crossed the line most biotechs never reach: profitability. Vyjuvek, approved in May 2023 for dystrophic epidermolysis bullosa, is a real commercial product, and the 10-K records that the company "began commercial marketing and sales and began recognizing revenue during the third quarter of 2023." In the first quarter of 2026 Vyjuvek produced $116.4 million in revenue, up 32% year over year, at a 95% gross margin, and cumulative net revenue since launch has passed $846 million. A gene therapy at a 95% margin throws off cash like a software company, and Krystal already does.

The balance sheet turns that profitability into optionality the market cannot easily price. Krystal carries no debt and roughly $1 billion in cash and investments, which means it funds its entire research pipeline internally without returning to the equity market to dilute holders. That is the structural advantage over a typical clinical-stage biotech: a funded company can run multiple programs to readout on its own timeline rather than racing a cash runway. The first product is the platform proof, and the same delivery technology underpins the pipeline, so each new program is an extension of validated science rather than a fresh bet from zero.

The pipeline is broad and approaching catalysts, which is what a durability bet needs. The 10-K describes KB407, "an inhaled (nebulized) formulation of our novel vector designed to deliver two copies of the full-length CFTR transgene for the treatment of CF," alongside ophthalmology, respiratory, and oncology programs, several carrying FDA orphan designation. Management expects multiple data readouts before year-end, including two registrational dry-eye trials, early cystic fibrosis data, and oncology updates. International expansion is already adding to the base, with Vyjuvek growth coming from Europe and Japan and a recent UK approval. Against rare-disease peers like Vericel and Harmony Biosciences, Krystal pairs a profitable commercial product with a self-funded pipeline, which is the combination the bull case argues the static methods cannot capture.

Bear Case

The erosion risk a holder should weigh is concentration: nearly all of Krystal's revenue comes from a single product treating a single rare disease, and the moat around it is narrower than the price assumes. Vyjuvek generated essentially all of the quarter's $116.4 million, which means the entire commercial business rests on one therapy whose addressable patient population is, by the nature of a rare disease, finite. The 10-K warns plainly that competitors "may obtain FDA or other regulatory approval for their products more rapidly or earlier than we may obtain approval for our product candidates, which could result in our competitors establishing a strong market position before we are able to enter the market." Gene-therapy science moves fast, and a single product's lead can be chipped away by a newer modality or a competing approach to the same disease.

The price requires the pipeline to deliver, and pipeline delivery is where biotech valuations break. At roughly 57 times operating income the market is paying for about fourteen years of growth held at the self-funding ceiling, and only about 14% of comparable fast-growers have sustained that pace even a decade. That premium is not underwritten by Vyjuvek alone; it requires the dry-eye, cystic fibrosis, and oncology programs to convert from candidates into products. Each of those readouts is binary, and a clinical trial that misses does not dent the price proportionally; it removes a leg the valuation was standing on. The asset-value, earnings-power, and peer-multiple methods all read the price as richly valued, and only the most growth-optimistic method reaches it, which means there is no valuation floor underneath the price if a key readout disappoints.

Reimbursement and pricing are the slow structural pressure on even a successful product. The 10-K flags that health-care reforms and cost reductions could make "VYJUVEK or our product candidates, if approved, not commercially viable or may adversely affect our anticipated future revenue and gross margins," and notes the company already pays commercial rebates that reduce reported revenue. A gene therapy priced for a rare disease is exactly the kind of high-cost treatment payers scrutinize, and pricing pressure on the one product that funds everything would compress both the cash flow and the optionality the bull case rests on. The balance sheet is pristine and the science is real, but the bear case is that the price already pays for more than a decade of flawless pipeline execution from a company whose entire revenue base is, today, one drug.

Valuation

The price is making an aggressive durability bet that only makes sense if the pipeline becomes the business. At today's level the market values Krystal at roughly 57 times its operating income, which inverts to about fourteen years of growth held at the self-funding ceiling. Krystal's current operating margin near 43% is already exceptional, and the price requires that profitability to persist and the revenue base to keep compounding far longer than most fast-growers manage. The relevant base rate is the honest caution here: only about 14% of comparable fast-growers have sustained that pace even ten years.

The method families disagree in the pattern that defines a premium growth stock. The asset-value lens reads the price at more than four times where it lands, the earnings-power lens at nearly three and a half times, and even the peer-multiple lens at one and a half times. Only the growth-oriented cash-flow method reaches the price, crediting the long-duration compounding the inversion describes. When every static method says richly valued and only the forward-growth method reaches the price, the price is a bet on durable compounding the conservative frames structurally cannot price, and for a biotech that bet specifically means the pipeline delivers on top of Vyjuvek. There is no asset or earnings floor under this price; it is a pipeline-and-platform valuation.

Solvency is the one place the bet is de-risked. Krystal carries no debt and roughly $1 billion in cash and investments, so it can fund every program to readout without diluting holders, which is the single biggest structural advantage a biotech can have. The valuation rests not on whether the company survives, which is not in question, but on whether the pipeline converts fast enough and broadly enough to grow into a 57-times multiple. Against rare-disease peers Vericel and Harmony Biosciences, Krystal commands a premium for its self-funded pipeline and its 95% gross margin, and analyst targets span a wide range, from roughly $268 to a Citigroup high of $378, that brackets today's price. That spread is itself the read: the street agrees the company is excellent and disagrees sharply on how much of the pipeline's value should already be in the price, which is precisely the bet this framework isolates.

Catalysts

The first-quarter 2026 print, reported in early May, was a clean beat that validated the commercial engine. Krystal posted GAAP EPS of $1.83 against an estimate near $1.45, on revenue of $116.4 million up 32% year over year, all from Vyjuvek, at a 95% gross margin and up 9% sequentially. Cumulative Vyjuvek net revenue since launch passed $846 million, with US net revenue of $87.5 million in the quarter, more than 695 reimbursement approvals, and 570 unique prescribers, while international expansion in Europe and Japan and a recent UK approval added to the base. The company reiterated its full-year 2026 combined research and selling-and-administrative expense guidance of $175 million to $195 million on a non-GAAP basis.

The pipeline readouts are the catalysts that will move the stock most, because they are what the premium is paying for. Management expects multiple data readouts before year-end, including two registrational dry-eye trials, initial repeat-dose data from KB407 in cystic fibrosis, early data in Hailey-Hailey disease, and updates for KB707 in non-small cell lung cancer and KB408 in alpha-1 antitrypsin deficiency. Each readout is a binary event: a registrational success opens a new commercial product and extends the durability the price assumes, while a miss removes a leg of the valuation.

The sell side is broadly positive but split on magnitude. The consensus rating sits at Strong Buy, with analyst price targets ranging widely from roughly $268 to a Citigroup high of $378 set in May 2026, brackets that span today's price. With the stock already pricing more than a decade of growth, the back half of 2026 readout calendar is the stretch that determines whether the optimism is vindicated or repriced.

Peer Cohorts (Per Segment, With Filing Citations)

Krystal Biotech (single segment) (reported)

• VCEL (VERICEL CORPORATION)
• FY2025 10-K: …recognized for the year ended December 31, 2025. Changes in estimates of the Transaction Price are recorded through revenue in the period in which such change occurs. Changes in estimates related to prior periods are shown in the Revenue by Product and Customer table below and relate primarily to changes in the…
• FY2025 10-K: Table of Contents PART I Item 1. Business General Information Vericel Corporation is a leading provider of advanced therapies for the sports medicine and severe burn care markets. We have a highly differentiated portfolio of cell therapy and specialty biologic products that combines innovations in biology with medical…
• FOLD (AMICUS THERAPEUTICS, INC.)
• FY2025 10-K: …0001178879 FALSE 2025 FY P3Y 0.0208 iso4217:USD xbrli:shares iso4217:USD xbrli:shares fold:therapy fold:country xbrli:pure fold:plan fold:segment fold:vote fold:payment fold:market fold:lawsuit 0001178879 2025-01-01 2025-12-31 0001178879 2025-06-30 0001178879 2026-02-12 0001178879 2025-12-31 0001178879 2024-12-31…
• FY2025 10-K: …attract, retain and motivate qualified personnel. • We expect to expand our development, regulatory and sales and marketing capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations. • Our employees, independent contractors, principal investigators,…
• AUPH (Aurinia Pharmaceuticals Inc.)
• FY2025 10-K: …false 2025 FY 0001600620 0.3333 iso4217:USD xbrli:shares iso4217:USD xbrli:shares auph:customer xbrli:pure auph:segment iso4217:CHF utr:sqft auph:extension_option auph:purchasePeriod auph:tranche 0001600620 2025-01-01 2025-12-31 0001600620 2025-06-30 0001600620 2026-02-25 0001600620 2025-10-01 2025-12-31 0001600620…
• FY2025 10-K: …have not experienced any difficulty in obtaining the raw materials required with respect to the manufacturing of voclosporin. We believe we have enough inventory on hand and manufacturing capacity to meet forecasted demand. In December 2020, Aurinia entered into a manufacturing services agreement with Lonza for the…
• APLS (APELLIS PHARMACEUTICALS, INC.)
• FY2025 10-K: …of C3 breakdown products in the kidney causing inflammation and damage to the organ. Since pegcetacoplan is designed to prevent C3 activation, we believe it has the potential to prevent further deposition of C3 activation products in the glomeruli, which may protect the kidney from further injury. We initiated two…
• FY2025 10-K: …the shares of common stock S-1/A 333-220941 10/27/2017 4.1 4.2 Investors' Rights Agreement dated as of August 7, 2017, among the Registrant and the other parties thereto S-1 333-220941 10/13/2017 4.2 4.3 Indenture (including form of Note), dated as of September 16, 2019, by and between Apellis Pharmaceuticals, Inc.…
• KNSA (Kiniksa Pharmaceuticals International, plc)
• FY2025 10-K: …​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at ​ ​ ​ Revenue ​ ​ ​ Balance at End ​ ​ Beginning of Period ​ Additions ​ Recognized ​ Reclassification ​ of Period Year ended December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contract Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Genentech vixarelimab ​ $ 261 ​ $ 5,000 ​ $…
• FY2025 10-K: …standard therapies to KPL-387 monotherapy. In October 2025, the FDA granted Orphan Drug Designation to KPL-387 for the treatment of pericarditis. KPL-1161 is an independently developed, pre-clinical, Fc-modified immunoglobulin G2 monoclonal antibody that binds IL-1R1, inhibiting IL-1α- and IL-1β-mediated signaling.…
• ARDX (ARDELYX, INC.)
• FY2025 10-K: …earnings to finance the growth and development of our business. Issuer Purchases of Equity Securities Not applicable. Stock Performance Graph The following performance graph shall not be deemed "soliciting material" or to be "filed" with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as…
• FY2025 10-K: …milestones upon achievement of respective events and are eligible to receive sales-based royalties and commercialization milestones. We also enter into supply agreements with our partners to supply drug substance or finished product for a fee. We have an exclusive license agreement with Knight for the development,…
• ARQT (ARCUTIS BIOTHERAPEUTICS, INC.)
• FY2025 10-K: …circumstances. F-21 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Notes to Consolidated Financial Statements Other revenue and related income tax expense related to the Huadong agreement was $ 4.0 million and $ 0.4 million, respectively, for the year ended December 31, 2025. Other revenue and related tax income…
• FY2025 10-K: …of 2025, the Company elected to halt further development of ARQ-255, a topical formulation of ivarmacitinib, for the treatment of alopecia areata. Ducentis Biotherapeutics LTD Acquisition On September 7, 2022, the Company entered into a Share Purchase Agreement with Ducentis Biotherapeutics LTD (Ducentis) and certain…
• HRMY (HARMONY BIOSCIENCES HOLDINGS, INC.)
• FY2025 10-K: …milestones and up to $ 240,000 upon achievement of sales-based milestones, as well as royalty rates in the mid-teens on any sales of product using the Licensed Compound in the Licensed Territories. ConSynance Agreement In August 2021, the Company entered into an asset purchase agreement with ConSynance Therapeutics,…
• FY2025 10-K: …in its wholly owned subsidiaries, Harmony Biosciences, LLC ("Harmony"), and Harmony Biosciences Management, Inc. The Company is a commercial-stage pharmaceutical company focused on developing and commercializing innovative therapies for patients living with rare neurological disorders as well as patients living with…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Krystal Q1 2026 results, May 2026 · Krystal Q1 2026 earnings call, May 2026 · Krystal Q1 2026 balance sheet, May 2026 · MarketBeat and Benzinga analyst consensus, 2026 · Krystal 2026 guidance, May 2026 · MarketBeat and Benzinga analyst coverage, 2026