Value
9.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.8 |
| P/S | 9.6 |
| EV/EBITDA | 8.9 |
| Fwd P/E | 10.0 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 4.0x
- ▸PEG: 0.01
- ▸Attractively valued
COLL · Why this verdict
Why Collegium Pharmaceutical (COLL) 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 score5.8/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
A high-quality franchise—with free cash flow running at over four times reported net income, a near-perfect financial strength score, and a forward multiple well below the sector—is priced at a significant discount to analyst estimates, with 38% upside to the consensus target and a 5.5-to-1 favorable risk/reward; however, elevated leverage, a mixed two-beat/two-miss earnings cadence, and 21% short interest create near-term headwinds that keep the setup from being actionable without a cleaner technical entry.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Free cash flow is running at over four times reported net income—with the combined growth-plus-profitability score clearing at 51 and a financial strength score of 8 out of 9—placing the business among the higher-quality tier of small-cap health-care operators on cash-generative metrics. Quality breakdown | Free cash flow continues to exceed 200% of reported net income for the next two fiscal years, validating the durability of cash generation above accounting earnings. | ↑Improving |
| CounterA free-cash-flow-to-net-income ratio well above 100% often reflects large non-cash charges in the income statement rather than a structural advantage; if those charges unwind or accounting normalizes, the ratio can compress sharply without any operational deterioration. | ||
Shares trade at roughly 4.5 times forward earnings with a PEG ratio near zero, while the consensus target of $47.27 implies 38% upside from the current price—supported by a 5.5-to-1 favorable risk/reward geometry and analyst upside embedded in current targets of approximately 59%. Price targets | The price closes more than half the gap to $47.27 within 12 months as earnings momentum and institutional re-rating narrow the discount. | →Stable |
| CounterA depressed valuation in a leveraged specialty-pharma business can persist for years if investors remain skeptical of earnings consistency or if the leverage profile discourages institutional allocation; the discount may reflect fair compensation for risk rather than a mispricing. | ||
With 21% of the float sold short in a company that scores in the higher-quality tier, the conditions for a short-covering rally exist if a positive catalyst forces bearish positions to cover, potentially amplifying any upside move beyond normal price action. Risk breakdown | Short interest falls below 10% of the float as positions are covered, either on improving fundamentals or a sustained price rise that makes the short thesis untenable. | ↑Improving |
| CounterHigh short interest in a leveraged specialty-pharma with a mixed earnings track record often reflects fundamental concern about debt sustainability rather than an overextended short position—the squeeze potential may never materialize if the bear thesis is correct. | ||
A debt-to-equity ratio of 3.0 leaves the business carrying meaningful financial leverage, and the earnings history shows two beats and two misses in an alternating pattern over the last four quarters—an inconsistency the market has priced into a depressed multiple. Bear case | Earnings beat rate improves to 3 of 4 or better over the next year and the debt-to-equity ratio falls below 2.5x, reducing the dual overhang on the multiple. | ↑Improving |
| CounterIf the mixed earnings cadence persists and leverage remains at 3x, management may be forced to prioritize debt repayment over growth investment, slowing the re-rating that the value thesis requires and keeping the discount in place indefinitely. | ||
Free cash flow is running at over four times reported net income—with the combined growth-plus-profitability score clearing at 51 and a financial strength score of 8 out of 9—placing the business among the higher-quality tier of small-cap health-care operators on cash-generative metrics.
↑ImprovingQuality breakdown
- Expectation
- Free cash flow continues to exceed 200% of reported net income for the next two fiscal years, validating the durability of cash generation above accounting earnings.
CounterA free-cash-flow-to-net-income ratio well above 100% often reflects large non-cash charges in the income statement rather than a structural advantage; if those charges unwind or accounting normalizes, the ratio can compress sharply without any operational deterioration.
Shares trade at roughly 4.5 times forward earnings with a PEG ratio near zero, while the consensus target of $47.27 implies 38% upside from the current price—supported by a 5.5-to-1 favorable risk/reward geometry and analyst upside embedded in current targets of approximately 59%.
→StablePrice targets
- Expectation
- The price closes more than half the gap to $47.27 within 12 months as earnings momentum and institutional re-rating narrow the discount.
CounterA depressed valuation in a leveraged specialty-pharma business can persist for years if investors remain skeptical of earnings consistency or if the leverage profile discourages institutional allocation; the discount may reflect fair compensation for risk rather than a mispricing.
With 21% of the float sold short in a company that scores in the higher-quality tier, the conditions for a short-covering rally exist if a positive catalyst forces bearish positions to cover, potentially amplifying any upside move beyond normal price action.
↑ImprovingRisk breakdown
- Expectation
- Short interest falls below 10% of the float as positions are covered, either on improving fundamentals or a sustained price rise that makes the short thesis untenable.
CounterHigh short interest in a leveraged specialty-pharma with a mixed earnings track record often reflects fundamental concern about debt sustainability rather than an overextended short position—the squeeze potential may never materialize if the bear thesis is correct.
A debt-to-equity ratio of 3.0 leaves the business carrying meaningful financial leverage, and the earnings history shows two beats and two misses in an alternating pattern over the last four quarters—an inconsistency the market has priced into a depressed multiple.
↑ImprovingBear case
- Expectation
- Earnings beat rate improves to 3 of 4 or better over the next year and the debt-to-equity ratio falls below 2.5x, reducing the dual overhang on the multiple.
CounterIf the mixed earnings cadence persists and leverage remains at 3x, management may be forced to prioritize debt repayment over growth investment, slowing the re-rating that the value thesis requires and keeping the discount in place indefinitely.
Per-dimension breakdown
Quality
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.9 |
| ROA | 3.8 |
| Gross margin | 10.0 |
| Op margin | 2.3 |
| Net margin | 3.0 |
| Current ratio | 4.1 |
| FCF quality | 10.0 |
| Moat | 6.2 |
| Rule of 40 | 7.8 |
| Piotroski F | 7.8 |
- ▸Excellent cash conversion: 676% FCF/NI
- ▸Rule of 40: 46 (pass)
- ▸Strong Piotroski F-Score: 7/9
Growth
4.1/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 4.1 |
Momentum
1.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 1.5 |
| Volume | 3.9 |
- ▸Capitulation risk (RSI 26, below 200MA)
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope flat
Sentiment
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.0 |
| Analyst rating | 6.5 |
| Price target | 9.9 |
- ▸LLM news sentiment: +0.40 (n=1)
- ▸Light analyst coverage (5.0) — signal dampened
- ▸Analyst upside: 81%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Negligible insider selling — $681 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.4 |
| quality rank | 6.2 |
| growth rank | 4.6 |
Technical
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.9 |
| support resistance | 7.6 |
| 52w position | 1.1 |
| gap | 6.0 |
Risk (lower is worse)
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.1 |
| days to cover | 0.0 |
| volatility | 0.0 |
| put call | 8.3 |
| implied vol | 0.0 |
| beta | 8.4 |
| debt equity | 1.1 |
- ▸Short squeeze setup: 19% short, quality 7.5
- ▸High IV: 82%
- ▸Concentration risks: 3 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 7.6 |
| news activity | 5.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +2 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+2Passed (6)
- ASYMMETRY:4.2>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:80d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:1.9<4.5
- DEATH_CROSS:HARD_BLOCK
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
4.20
Upside
+57.8%
Downside
13.8%
Sizing output
AVOID
SetupFalling Knife — Death cross, below all MAs, RSI 26, MACD bearish
EdgeInst Constrain — Small cap ($0.9B) below institutional reach
SuitabilitySpeculative — Drawdown -44% (>40% off 52w high)
Investment implication
The F-path SELL output reflects an overall score of 4.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 9.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:1.9<4.5, DEATH_CROSS:HARD_BLOCK) reinforce the read. Current asymmetry R:R is 4.20 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 9.0, Sentiment at 7.7, and Insider at 7.3; the weakest are Momentum at 1.9, Risk (lower is worse) at 3.7, and Growth at 4.1. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 4.20 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Cash Conversion Quality
Trip ifFree cash flow falls below 100% of reported net income for 2 consecutive fiscal quarters, indicating the cash conversion premium has materially compressed.
- P2Deep Value Wide Analyst Gap
Trip ifEPS surprise falls below 0% for 2 consecutive quarters, undermining the earnings-growth premise required to close the valuation gap to $47.27.
- P3High Short Interest Squeeze Setup
Trip ifShort interest rises above 30% of the float for 2 consecutive months, indicating the fundamental bear case is strengthening rather than approaching exhaustion.
- P4Leverage Mixed Earnings Headwind
Trip ifDebt-to-equity ratio rises above 4x, increasing financial leverage risk materially beyond the current 3.0x level.