AGIO

We rate AGIOS PHARMACEUTICALS, INC. (AGIO) as Avoid with a composite score of 39.7/100 at a current price of $30.38. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in stability (57th percentile) and investment (39th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (25th percentile) and value (32th percentile) tempers our overall conviction. We assign a Narrow Moat rating (56/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is narrowing, which raises the risk of a future downgrade if the trend persists.

AGIOS PHARMACEUTICALS, INC. holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 39.7/100 places it at rank #3576 in our full 7,333-stock universe. At $2.3B in market capitalization, AGIOS PHARMACEUTICALS, INC. is a mid-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 50%, though momentum at the 25th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 88% (+45.5pp vs sector) narrow to operating margins of -1074% (-1075.4pp vs sector) and net margins of 1962.2%, yielding a gross-to-net conversion rate of 2229%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $30.38, AGIOS PHARMACEUTICALS, INC. is trading at a premium to fundamental value. Our value factor score of 32/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 2.7x (a 88% discount to the sector median of 22.3x), P/B of 1.4x, P/S of 39.8x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to AGIOS PHARMACEUTICALS, INC.. The company exhibits strong financial stability with a beta of 0.91, conservative leverage (9% D/E), and a stability factor in the 57th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

We identify no major risk factors at this time. The company's stability factor sits at the 57th percentile with quality at the 37th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: healthy gross margins of 88% provide a buffer against cost pressures; conservative leverage (9% D/E) limits balance sheet risk. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate AGIOS PHARMACEUTICALS, INC.'s capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 53.9%, disciplined leverage (9% D/E), best-in-class net margins of 1962.2%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — AGIOS PHARMACEUTICALS, INC. meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. We note that the combination of 49.6% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, AGIOS PHARMACEUTICALS, INC. receives a Avoid rating with a composite score of 39.7/100 (rank #3576 of 7,333). Our quantitative framework assigns a Narrow Moat (56/100, trend: narrowing), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 38/100.

Our analysis does not support a constructive view on AGIOS PHARMACEUTICALS, INC. at this time. The combination of the current quantitative profile, low uncertainty, and exemplary capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.