Value
8.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 10.0 |
| P/S | 7.5 |
| EV/EBITDA | 7.3 |
| Fwd P/E | 9.2 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 10.7x
- ▸PEG: 0.34
- ▸Attractively valued
INVA · Why this verdict
Why Innoviva (INVA) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score6.4/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Innoviva is a high-quality, attractively valued franchise — wide economic moat, 51% return on equity, forward P/E of 10.1x at a PEG of 0.32, and 34.6% upside to analyst targets — but the primary risk is a forecasted approximately 65% earnings contraction that would collapse the attractive trailing valuation; the investment case depends on earnings holding up better than feared or the current price already discounting the decline.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The forward P/E of 10.1x is 2.8 times the trailing P/E, implying the market prices in an earnings decline of approximately 65%; if this contraction arrives as feared, the currently attractive trailing valuation becomes misleading and the forward multiple is not as inexpensive as it initially appears. Warnings | Forward P/E compressing below 6x within 4 quarters — as earnings hold up better than feared — would falsify the contraction thesis and confirm the current valuation as genuinely attractive on a forward basis. | →Stable |
| CounterThree of the past four quarters delivered positive earnings surprises with an average of 18.46%, suggesting management has guided conservatively; the feared 65% earnings decline may embed worst-case peak assumptions that the company can partially offset. | ||
A wide economic moat, 51% return on equity, and a Piotroski F-Score of 8 out of 9 mark this as a high-quality franchise with durable competitive characteristics; 3 beats and 1 miss across the past 4 quarters — with the two most recent quarters both beating — reinforces a track record of operational execution. Quality breakdown | The beat pattern extending through the next 2 quarters would confirm that the quality of the franchise supports continued positive surprises even in a cyclically challenging earnings environment. | →Stable |
| CounterFree cash flow is only 21% of reported net income — a red flag indicating that reported profitability overstates cash generation; if the FCF divergence persists, the high return on equity may not translate into tangible capital available for shareholders. | ||
Free cash flow represents only 21% of reported net income — a significant divergence flagged as an earnings quality red flag; if sustained, this limits the practical ability to fund capital allocation from operating cash flow, regardless of how strong headline profits appear. Quality breakdown | Free cash flow rising above 60% of net income for 2 consecutive quarters would resolve the quality concern and confirm that earnings are converting to distributable cash. | →Stable |
| CounterThe wide moat designation and strong Piotroski score suggest the business is not broadly deteriorating; the FCF divergence may reflect specific non-cash or working capital items that normalize over time rather than a fundamental cash generation problem. | ||
A forward P/E of 10.1x, PEG of 0.32, and 34.6% upside to the analyst consensus target of $30.18 from the current $22.42 make this one of the more attractively priced names versus peers by P/E ranking; the risk/reward of 6.41-to-1 is favorable assuming the approximately 65% earnings contraction does not fully materialize. Valuation breakdown | Analyst consensus target remaining above $28.00 over the next 12 months would confirm that fundamental recognition of the franchise has not eroded. | →Stable |
| CounterIf the analyst consensus target is cut below $25.00, implied upside shrinks below 12% from the current price, and the risk/reward case weakens materially if the earnings contraction arrives broadly on schedule. | ||
A recent officer departure or appointment has triggered a governance flag at a moment when the company is navigating a potential cyclical earnings peak; leadership transitions can introduce strategic uncertainty even when the underlying business quality is intact. Gates warning | Two consecutive quarterly earnings beats (EPS surprise above 5%) following the transition would confirm leadership continuity has not disrupted operational execution. | →Stable |
| CounterInsider selling activity was zero over the past 90 days and the insider signal is neutral; absent active insider exit behavior, the executive transition may be routine succession rather than a signal of strategic concern. | ||
The forward P/E of 10.1x is 2.8 times the trailing P/E, implying the market prices in an earnings decline of approximately 65%; if this contraction arrives as feared, the currently attractive trailing valuation becomes misleading and the forward multiple is not as inexpensive as it initially appears.
→StableWarnings
- Expectation
- Forward P/E compressing below 6x within 4 quarters — as earnings hold up better than feared — would falsify the contraction thesis and confirm the current valuation as genuinely attractive on a forward basis.
CounterThree of the past four quarters delivered positive earnings surprises with an average of 18.46%, suggesting management has guided conservatively; the feared 65% earnings decline may embed worst-case peak assumptions that the company can partially offset.
A wide economic moat, 51% return on equity, and a Piotroski F-Score of 8 out of 9 mark this as a high-quality franchise with durable competitive characteristics; 3 beats and 1 miss across the past 4 quarters — with the two most recent quarters both beating — reinforces a track record of operational execution.
→StableQuality breakdown
- Expectation
- The beat pattern extending through the next 2 quarters would confirm that the quality of the franchise supports continued positive surprises even in a cyclically challenging earnings environment.
CounterFree cash flow is only 21% of reported net income — a red flag indicating that reported profitability overstates cash generation; if the FCF divergence persists, the high return on equity may not translate into tangible capital available for shareholders.
Free cash flow represents only 21% of reported net income — a significant divergence flagged as an earnings quality red flag; if sustained, this limits the practical ability to fund capital allocation from operating cash flow, regardless of how strong headline profits appear.
→StableQuality breakdown
- Expectation
- Free cash flow rising above 60% of net income for 2 consecutive quarters would resolve the quality concern and confirm that earnings are converting to distributable cash.
CounterThe wide moat designation and strong Piotroski score suggest the business is not broadly deteriorating; the FCF divergence may reflect specific non-cash or working capital items that normalize over time rather than a fundamental cash generation problem.
A forward P/E of 10.1x, PEG of 0.32, and 34.6% upside to the analyst consensus target of $30.18 from the current $22.42 make this one of the more attractively priced names versus peers by P/E ranking; the risk/reward of 6.41-to-1 is favorable assuming the approximately 65% earnings contraction does not fully materialize.
→StableValuation breakdown
- Expectation
- Analyst consensus target remaining above $28.00 over the next 12 months would confirm that fundamental recognition of the franchise has not eroded.
CounterIf the analyst consensus target is cut below $25.00, implied upside shrinks below 12% from the current price, and the risk/reward case weakens materially if the earnings contraction arrives broadly on schedule.
A recent officer departure or appointment has triggered a governance flag at a moment when the company is navigating a potential cyclical earnings peak; leadership transitions can introduce strategic uncertainty even when the underlying business quality is intact.
→StableGates warning
- Expectation
- Two consecutive quarterly earnings beats (EPS surprise above 5%) following the transition would confirm leadership continuity has not disrupted operational execution.
CounterInsider selling activity was zero over the past 90 days and the insider signal is neutral; absent active insider exit behavior, the executive transition may be routine succession rather than a signal of strategic concern.
Per-dimension breakdown
Quality
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 4.5 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Current ratio | 5.0 |
| FCF quality | 1.7 |
| Moat | 9.0 |
| Rule of 40 | 5.5 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 51%
- ▸Earnings quality RED FLAG: 21% FCF/NI
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
Growth
5.2/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 5.2 |
Momentum
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 9.9 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.3 |
| Price target | 9.5 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (4.0) — signal dampened
- ▸Analyst upside: 50%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
5.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.8 |
| quality rank | 9.8 |
| growth rank | 4.0 |
- ▸Attractive P/E vs peers
- ▸Superior ROE vs peers
Technical
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.6 |
| support resistance | 1.7 |
| 52w position | 8.8 |
Risk (lower is worse)
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.7 |
| days to cover | 2.8 |
| volatility | 5.8 |
| put call | 8.9 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 9.0 |
- ▸High IV: 95%
- ▸Above max pain $12
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (7)
- MOMENTUM:6.8>=5.5
- ASYMMETRY:2.7>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:41d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
2.69
Upside
+27.5%
Downside
10.2%
Sizing output
AVOID
SetupBREAKOUT — Golden cross, above all MAs, RSI 69, MACD bullish
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — MCap $1.7B<$5B
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:6.8>=5.5. Top dim: Value at 8.9; weakest: Technical at 3.7. No conviction either direction.
The strongest dimensions are Value at 8.9, Quality at 7.2, and Sentiment at 7.0; the weakest are Technical at 3.7, Insider at 5.0, and Growth at 5.2. The V9 engine cleared all gates with 1 warning, producing an asymmetric reward-to-risk of 2.69 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The forward P/E of 10.1x is 2.8 times the trailing P/E, implying the market prices in an earnings decline of approximately 65%; if this contraction arrives as feared, the currently attractive trailing valuation becomes misleading and the forward multiple is not as inexpensive as it initially appears.
Trip ifForward P/E compresses below 6x as earnings estimates are revised upward, indicating the feared 65% contraction is not materializing.
- P2A wide economic moat, 51% return on equity, and a Piotroski F-Score of 8 out of 9 mark this as a high-quality franchise with durable competitive characteristics; 3 beats and 1 miss across the past 4 quarters — with the two most recent quarters both beating — reinforces a track record of operational execution.
Trip ifThree consecutive quarters of earnings misses (EPS surprise below 0%), reversing the established beat pattern.
- P3Free cash flow represents only 21% of reported net income — a significant divergence flagged as an earnings quality red flag; if sustained, this limits the practical ability to fund capital allocation from operating cash flow, regardless of how strong headline profits appear.
Trip ifFree cash flow rises above 60% of net income for 2 consecutive quarters, resolving the earnings conversion concern.
- P4A forward P/E of 10.1x, PEG of 0.32, and 34.6% upside to the analyst consensus target of $30.18 from the current $22.42 make this one of the more attractively priced names versus peers by P/E ranking; the risk/reward of 6.41-to-1 is favorable assuming the approximately 65% earnings contraction does not fully materialize.
Trip ifAnalyst consensus target falls below $25.00, reducing implied upside below 12% from the current price of $22.42.
- P5A recent officer departure or appointment has triggered a governance flag at a moment when the company is navigating a potential cyclical earnings peak; leadership transitions can introduce strategic uncertainty even when the underlying business quality is intact.
Trip ifTwo consecutive quarterly earnings beats (EPS surprise above 5%) post-transition confirm leadership continuity has not disrupted operations.