QS Research · Michael Burry's Scion Capital analyst template · 2006
HALOZYME THERAPEUTICS, INC. (HALO)
As of 2026-11-11 · 12/15 boxes filled from SEC filings and market data
Report price $102.98 (close 2026-11-10)
Conclusion: WATCH
Conviction medium · base case -2% · downside -24% · upside +28%
At $102.98 the stock is already at 24.2x TTM P/E, and the peer median P/E of 23.7x (5 peers in the comps table) gives a base value of $100.85 (-2.1%), so there is no margin of safety in the base case. I use post-deal TTM to Sep 2026 net income of $485.4M and the guided FY2026 EBITDA midpoint of $690.9M (GAAP), not a cycle average, because $726.0M of acquisitions make pre-deal earnings a smaller company. A 10% earnings decline at a compressed 20.57x P/E gives about $78.8 (-23.5%), while 28% earnings growth at today's 24.2x gives about $131.8 (+28.0%); reward/risk is 1.19:1, so the rule makes this a watch with medium conviction, not a long. The quality is real (ROIC 22.8% vs WACC 4.6%, FCF margin 49.1%) and the 2026-11-05 guidance raise supports the upside, but net debt of $2.22B and the Hypercon impairment contingency cap the downside case.
Key numbers
- Share price: $102.98
- Market cap: $11.74B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $1.80B
- EV / EBITDA (TTM): 20.2x
- P/E (TTM): 24.2x
- FCF yield: 7.5%
- Earnings-quality flags (TTM): none flagged
- EV / FCF (TTM): 15.8x
- Revenue growth (latest fiscal year): +37.6%
- ROIC (TTM): 22.8%
- WACC: 4.6%
- Economic profit spread: +18.2 pts
The 15 boxes
- ✓ 1. Long-form business notes
Halozyme is a licensing and royalty business built on one enzyme (rHuPH20) plus drug-delivery device technology: it collects upfronts, milestones, bulk-enzyme sales and royalties from partners who put its ENHANZE technology into their injected drugs. Between the FY2020 10-K and the FY2025 10-K the model scaled sharply (ten collaborations with five partnered approvals to thirteen collaborations with ten) and the portfolio widened through the Elektrofi/Hypercon and Surf Bio technologies and the proprietary product XYOSTED. Revenue went from $267.6M (FY2020) to $1.40B (FY2025) and $1.80B (TTM to Sep 2026), but operating income slipped from $551.5M (FY2024) to $469.0M (FY2025) before recovering to $674.2M on a TTM basis, and it is a highly cash-generative, low-capex model whose reported earnings are reduced by large non-cash intangible amortization from the deals.
- ✓ 2. Competitive advantage
The advantage is real but narrow and licence-based, not network- or scale-based. Halozyme holds the only FDA-approved recombinant human hyaluronidase on the market (Hylenex) plus the ENHANZE royalty position, and it shows up in the numbers: GAAP operating margin was about 40-54% in every post-Antares year (FY2022-FY2025) and about 37.5% on the TTM to 2026-09-30, with operating cash flow of $898.3M against $674.2M of operating income and only $12.4M of capex in the same TTM. But the moat is a delivery-technology licence, not a locked-in customer base: Alteogen's ALT-B4 is already licensed for subcutaneous formulations, revenue depends on partners who do their own competing commercialization, and margin is not stable (about 54% in FY2024 fell to about 33.5% in FY2025 and operating income fell to $469.0M even as revenue rose to $1.40B).
- ✓ 3. 10-Q takeaways
Q3 2026 was an operating quarter, not a one-off: total revenue rose 39% to $493.0 million and royalties 44% to $341.0 million versus Q3 2025, with operating income of $295.0 million and net income of $247.0 million. Cost growth was concentrated in cost of sales ($82.5M), intangibles amortization ($29.5M, tied to the Elektrofi deal) and SG&A ($58.2M, including patent litigation costs). Cash and securities jumped to $1.08 billion at September 30, 2026 from $145.4 million at December 31, 2025 on convertible notes plus operations, while $400 million of 2026 buybacks were completed. FY2026 guidance was raised and is fully numeric (total revenue $1.860–1.925B, Adjusted EBITDA $1.240–1.290B), with the stated caveat that a Hypercon partner target return could force a material interim impairment.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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