AKBA

We rate Akebia Therapeutics, Inc. (AKBA) as a Reduce with a composite score of 41.2/100 at a current price of $1.24. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in value (66th percentile) and quality (65th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (15th percentile) and investment (23th percentile) tempers our overall conviction. We assign a Narrow Moat rating (45/100), High uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Akebia Therapeutics, 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 41.2/100 places it at rank #3394 in our full 7,333-stock universe. At $724M in market capitalization, Akebia Therapeutics, Inc. is a small-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 35%, though momentum at the 15th 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 79% (+36.8pp vs sector) narrow to operating margins of 5% (+3.8pp vs sector) and net margins of -10.4%, yielding a gross-to-net conversion rate of -13%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $1.24, Akebia Therapeutics, Inc. is trading near fair value based on current fundamentals. Our value factor score of 66/100 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. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at EV/EBITDA of 18.5x (at a premium), P/B of 7.5x, P/S of 1.4x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a High uncertainty rating to Akebia Therapeutics, Inc.. Key risk factors include significant leverage (115% debt-to-equity), current negative profitability (net margin -10.4%), below-average price stability (39th percentile). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (115% debt-to-equity); current negative profitability (net margin -10.4%); below-average price stability (39th percentile); the combination of leverage (115% D/E) and thin margins (-10.4% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 39th percentile and quality factor at the 65th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 79% provide a buffer against cost pressures. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate Akebia Therapeutics, Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-31.6%), negative profitability, weak asset returns (ROA -3.6%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Akebia Therapeutics, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Akebia Therapeutics, Inc. receives a Reduce rating with a composite score of 41.2/100 (rank #3394 of 7,333). Our quantitative framework assigns a Narrow Moat (45/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 41/100.

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