Value
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 9.3 |
| P/S | 4.8 |
| EV/EBITDA | 3.8 |
| Fwd P/E | 7.4 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 16.7x
- ▸PEG: 0.30
AUPH · Why this verdict
Why Aurinia Pharmaceuticals (AUPH) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score6.9/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Aurinia Pharmaceuticals offers a rare combination of a four-quarter earnings beat streak, elite operating margins, and a below-market forward multiple, but the stock has nearly closed the gap to its near-term resistance target and free cash flow converts at less than half of reported net income — arguing for patience over immediate deployment.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Gross margins of 100%, a Rule-of-40 score of 66, and a Piotroski F-Score of 8 out of 9 place this among the highest-quality franchises in its peer group, underpinned by a wide economic moat. Quality breakdown | Gross and operating margins remain above 90% and the Rule-of-40 score stays above 55 over the next four reported quarters. | →Stable |
| CounterFree cash flow converts at only 42% of reported net income — a flagged quality concern — meaning the headline profitability metrics overstate actual cash generation, and further deterioration in cash conversion could discount the apparent franchise quality. | ||
The company has beaten consensus estimates in each of the last four reported quarters, averaging a 171% positive surprise across the period, demonstrating a sustained pattern of under-promising and over-delivering. Catalyst breakdown | The beat streak extends through the next two quarterly reports, with each EPS surprise remaining above 0%. | →Stable |
| CounterThe average is heavily distorted by a single 606% beat in the February quarter; excluding that anomaly, the remaining surprises are far more modest, and mean-reversion in the next print could break the streak without any fundamental deterioration. | ||
A forward price-to-earnings multiple of 14.3 times and a PEG ratio of 0.25 make the stock attractively priced relative to both its own growth trajectory and industry peers, with 24% year-over-year earnings growth supporting the discount. Valuation breakdown | Forward P/E stays below 22 times and the PEG remains below 0.5 as earnings estimates hold or improve over the next 12 months. | →Stable |
| CounterThe price-to-earnings multiple is described as having expanded roughly 1.9 times as earnings normalize; if growth decelerates from recent elevated levels, the apparent discount could compress quickly, leaving today's valuation less attractive than it appears. | ||
Despite strong reported net income, free cash flow represents only 42% of earnings — a red-flag quality concern indicating that reported profits are not fully materializing as cash on hand. Quality breakdown | Free cash flow as a percentage of net income rises above 65% over the next two to three quarters, signaling the earnings quality concern is resolving. | →Stable |
| CounterIf the gap between reported earnings and cash generation reflects temporary working-capital timing rather than structural accrual inflation, it may self-correct without any negative impact on the income statement, making this concern transient. | ||
With only 2.3% headroom remaining to the near-term resistance target of $16.37, the reward-to-risk ratio of 1.49 falls just short of the bar needed for favorable asymmetry — the setup favors patience over immediate entry. Price targets | The stock pulls back to the $15.25 support zone before the July earnings date, restoring a more favorable entry geometry. | →Stable |
| CounterThe technical setup is constructive — a golden cross, price above all major moving averages, RSI at 64, and a bullish MACD — and a strong July earnings print could push the price through current resistance, making today's near-target price the floor of a new range rather than the ceiling. | ||
Gross margins of 100%, a Rule-of-40 score of 66, and a Piotroski F-Score of 8 out of 9 place this among the highest-quality franchises in its peer group, underpinned by a wide economic moat.
→StableQuality breakdown
- Expectation
- Gross and operating margins remain above 90% and the Rule-of-40 score stays above 55 over the next four reported quarters.
CounterFree cash flow converts at only 42% of reported net income — a flagged quality concern — meaning the headline profitability metrics overstate actual cash generation, and further deterioration in cash conversion could discount the apparent franchise quality.
The company has beaten consensus estimates in each of the last four reported quarters, averaging a 171% positive surprise across the period, demonstrating a sustained pattern of under-promising and over-delivering.
→StableCatalyst breakdown
- Expectation
- The beat streak extends through the next two quarterly reports, with each EPS surprise remaining above 0%.
CounterThe average is heavily distorted by a single 606% beat in the February quarter; excluding that anomaly, the remaining surprises are far more modest, and mean-reversion in the next print could break the streak without any fundamental deterioration.
A forward price-to-earnings multiple of 14.3 times and a PEG ratio of 0.25 make the stock attractively priced relative to both its own growth trajectory and industry peers, with 24% year-over-year earnings growth supporting the discount.
→StableValuation breakdown
- Expectation
- Forward P/E stays below 22 times and the PEG remains below 0.5 as earnings estimates hold or improve over the next 12 months.
CounterThe price-to-earnings multiple is described as having expanded roughly 1.9 times as earnings normalize; if growth decelerates from recent elevated levels, the apparent discount could compress quickly, leaving today's valuation less attractive than it appears.
Despite strong reported net income, free cash flow represents only 42% of earnings — a red-flag quality concern indicating that reported profits are not fully materializing as cash on hand.
→StableQuality breakdown
- Expectation
- Free cash flow as a percentage of net income rises above 65% over the next two to three quarters, signaling the earnings quality concern is resolving.
CounterIf the gap between reported earnings and cash generation reflects temporary working-capital timing rather than structural accrual inflation, it may self-correct without any negative impact on the income statement, making this concern transient.
With only 2.3% headroom remaining to the near-term resistance target of $16.37, the reward-to-risk ratio of 1.49 falls just short of the bar needed for favorable asymmetry — the setup favors patience over immediate entry.
→StablePrice targets
- Expectation
- The stock pulls back to the $15.25 support zone before the July earnings date, restoring a more favorable entry geometry.
CounterThe technical setup is constructive — a golden cross, price above all major moving averages, RSI at 64, and a bullish MACD — and a strong July earnings print could push the price through current resistance, making today's near-target price the floor of a new range rather than the ceiling.
Per-dimension breakdown
Quality
8.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 9.1 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 7.5 |
| FCF quality | 3.3 |
| Moat | 9.0 |
| Rule of 40 | 9.5 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 65%
- ▸Strong margins: 100%
- ▸Earnings quality RED FLAG: 42% FCF/NI
- ▸Wide economic moat
Growth
9.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 8.6 |
| EPS growth | 10.0 |
- ▸Strong growth: 24% YoY
Momentum
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.2 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Overbought (RSI 77)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 3.7 |
| erm sentiment | 5.0 |
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 9.0 |
| insider conviction | 8.0 |
| holder change | 5.0 |
- ▸Heavy insider buying — $12,455,227 (0.520% of mkt cap)
Peer rank
5.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.5 |
| quality rank | 9.7 |
| growth rank | 5.2 |
- ▸Attractive P/E vs peers
- ▸Superior ROE vs peers
Technical
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 1.5 |
| 52w position | 9.3 |
Risk (lower is worse)
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.2 |
| days to cover | 3.4 |
| volatility | 3.1 |
| put call | 10.0 |
| implied vol | 3.6 |
| max pain risk | 3.0 |
| beta | 5.3 |
| debt equity | 9.5 |
- ▸Above max pain $9
Catalyst
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Fundamentals strong but target reached (-20.4% upside).
Engine technical detail
verdict_path:
L4:PATH_A_VALUE_MOS33|V8:TARGET_REACHEDPassed (6)
- MOMENTUM:6.6>=5.5
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:34d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-1.4=NEGATIVE
- INSIDER:0.52%=HEAVY
Warning (0)
none
Reward-to-Risk
-1.36
Upside
-20.4%
Downside
15.0%
Sizing output
STARTER
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — Beta 1.43>1.3, MCap $2.4B<$5B
Investment implication
The STRONG_BUY_WAIT verdict reflects the ASYMMETRY gate's -1.4=NEGATIVE outcome against Growth at 9.3 and asymmetric R:R of -1.36.
The strongest dimensions are Growth at 9.3, Quality at 8.7, and Catalyst at 7.5; the weakest are Technical at 3.6, Sentiment at 4.6, and Risk (lower is worse) at 5.5. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -1.36 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The company has beaten consensus estimates in each of the last four reported quarters, averaging a 171% positive surprise across the period, demonstrating a sustained pattern of under-promising and over-delivering.
Trip ifEPS surprise falls below 0% in any single reported quarter.
- P2Gross margins of 100%, a Rule-of-40 score of 66, and a Piotroski F-Score of 8 out of 9 place this among the highest-quality franchises in its peer group, underpinned by a wide economic moat.
Trip ifRule-of-40 score falls below 50 for 2 consecutive quarters.
- P3A forward price-to-earnings multiple of 14.3 times and a PEG ratio of 0.25 make the stock attractively priced relative to both its own growth trajectory and industry peers, with 24% year-over-year earnings growth supporting the discount.
Trip ifForward price-to-earnings multiple expands above 22 times for 2 consecutive quarters.
- P4Despite strong reported net income, free cash flow represents only 42% of earnings — a red-flag quality concern indicating that reported profits are not fully materializing as cash on hand.
Trip ifFree cash flow as a percentage of net income rises above 65% for 2 consecutive quarters.
- P5With only 2.3% headroom remaining to the near-term resistance target of $16.37, the reward-to-risk ratio of 1.49 falls just short of the bar needed for favorable asymmetry — the setup favors patience over immediate entry.
Trip ifPrice closes above $16.37 on volume more than 1.5 times the 20-day average, confirming a breakout through resistance.