Alnylam Pharmaceuticals Inc (ALNY)

Conclusion

Alnylam Pharmaceuticals develops and commercialises RNA interference medicines, with marketed products including ONPATTRO, AMVUTTRA and Leqvio. At 156.61 USD on 9 November 2026, the company has a market capitalisation of 20.98 billion USD and an enterprise value of 18.65 billion USD.

The verdict is undervalued. The price-to-earnings ratio is 7.70x, enterprise value to EBITDA 14.94x and price to free cash flow 41.89x. Ten-year medians exist only for price to sales, at 30.80x against a current 4.18x (a premium of -86.4%), and for price to book, at 14.30x against a current 5.82x (a premium of -59.3%). The fair value band runs from 331.85 to 497.78 USD with a midpoint of 414.81 USD, a margin of safety of 164.9%. The discounted cash flow gives 60.84 USD per share, and the fair value from historical multiples is 768.79 USD. The reverse DCF implies revenue growth of 28.1% a year, against five-year revenue growth of 49.8%.

What holds the case up is a net cash position, with net debt to EBITDA of -1.86x and a current ratio of 2.48x, and a return on invested capital of 90.6% against a WACC of 8.99%. What would break it is weak cash conversion, with free cash flow at 18.4% of earnings on a trailing twelve-month basis, a share count rising 3.2% a year over five years, and a next-year EPS growth estimate of -50.7%.

Financial health

Financial health is green, held up by a net cash position: net debt to EBITDA of -1.86x, a current ratio of 2.48x and a quick ratio of 2.26x, with debt to equity at 0.35x. Interest coverage of 3.27x is rated neutral. The Altman Z-score is 3.71, in the safe zone, although that model was designed for manufacturers and Alnylam is a biotechnology company. Insolvency risk: low, about 1.5% by the estimate of the Ohlson model over one to two years. The company is therefore well placed to fund its operations from its own balance sheet, though its interest coverage leaves less room than its cash position suggests.

Earnings quality

Earnings quality is red, pulled down by weak cash conversion and dilution. Free cash flow conversion is 18.4% on a trailing twelve-month basis, and the five-year figure is not available. The accrual ratio is -4.57%. Stock-based compensation is 6.1% of revenue, leaving free cash flow after it of 193.2 million USD. The share count has risen 3.2% a year over five years. The Piotroski score is 6 of 9, and the Beneish M-score is not available. The company beat earnings estimates in 6 of its last 8 quarters, with an average surprise of 174.8%. Current-year estimates rose 153.1% over 90 days, while next-year estimates fell 11.5% over 90 days, with 7 downward revisions and 1 upward revision in the last 30 days.

Profitability

Profitability is green, led by a return on invested capital of 90.6% against a WACC of 8.99%, with a given difference of 81.6%. Gross margin is 77.3% against a ten-year median of 84.9%. Operating margin is 19.5% and net margin 54.3%, while their ten-year medians are -126.0% and -141.6%, so the history includes years of losses. Operating margin stability is 1.14. Return on equity of 75.6% needs care. The 2025 DuPont split shows a net margin of 8.45%, asset turnover of 0.75x and an equity multiplier of 6.29x, so leverage contributes a large part of the equity return.

Growth

Growth is yellow. Revenue has grown at 53.0% a year over three years, 49.8% over five years and 56.9% over ten years, and it rose in 9 of 10 comparable years. Earnings per share growth is not available. The colour is held back by the next-year EPS estimate, which implies growth of -50.7%. The reverse DCF implies 28.1% growth a year, which sits below the five-year revenue growth of 49.8%, but the near-term estimate points the other way. Past growth has been strong and consistent, while the forward earnings picture is weaker.

Valuation

Valuation is green, and the verdict is undervalued. Price to sales is 4.18x against a ten-year median of 30.80x, and price to book is 5.82x against 14.30x. The price-to-earnings, EV-to-EBITDA and price-to-free-cash-flow ten-year medians are not available. The free cash flow yield is 2.4% and the earnings yield 13.0%. The discounted cash flow gives 60.84 USD per share at a discount rate of 8.9%, with 20.0% initial growth and 2.5% terminal growth, and about 63% of its value sits in the terminal value. The fair value band is 331.85 to 497.78 USD, with a midpoint of 414.81 USD and a margin of safety of 164.9%. These figures are an order of magnitude built on fixed assumptions, including a 5% equity risk premium and capped growth, not a price target. The company pays no dividend.

Risks

Weak cash conversion is the most important risk. Free cash flow at 18.4% of earnings means reported profits are not turning into cash at the same rate. Dilution of 3.2% a year reduces the value per share for existing holders, and the next-year EPS estimate of -50.7% suggests the earnings path may be shrinking. Interest coverage of 3.27x is rated neutral and would tighten if earnings fell. The share price was 456.00 USD on 30 September 2025 and 156.61 USD on 9 November 2026, so the market has already priced in a large part of this change. Not available: five-year free cash flow conversion, the Beneish M-score, EPS growth and the ten-year medians for three multiples. This analysis has no debt maturity schedule and no revenue by segment, so refinancing risk and product concentration cannot be assessed.