COLL

We rate COLLEGIUM PHARMACEUTICAL, INC (COLL) as a Hold with a composite score of 61.2/100 at a current price of $45.19. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in value (90th percentile) and stability (86th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (24th percentile) and momentum (62th percentile) tempers our overall conviction. We assign a Narrow Moat rating (42/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: 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.

COLLEGIUM PHARMACEUTICAL, 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 61.2/100 places it at rank #579 in our full 7,333-stock universe. At $1.1B in market capitalization, COLLEGIUM PHARMACEUTICAL, INC is a small-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

The near-term outlook is constructive, with revenue growing at 44% and momentum in the 62th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 24th percentile indicates reinvestment patterns that investors should monitor for sustainability.

The margin cascade tells an important story: gross margins of 59% (+16.2pp vs sector) narrow to operating margins of 21% (+19.3pp vs sector) and net margins of 7.2%, yielding a gross-to-net conversion rate of 12%. 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 $45.19, COLLEGIUM PHARMACEUTICAL, INC appears undervalued relative to its fundamentals. Our value factor score of 90/100 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 stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 25.8x (roughly in line with the sector median of 22.3x), EV/EBITDA of 9.3x (near the sector median), P/B of 5.2x, P/S of 1.9x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Medium uncertainty rating to COLLEGIUM PHARMACEUTICAL, INC. The stock presents a balanced risk profile: significant leverage (485% debt-to-equity) and low beta of 0.48 — while defensive, this may indicate limited upside participation in bull markets. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (485% debt-to-equity); low beta of 0.48 — while defensive, this may indicate limited upside participation in bull markets. 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 86th percentile and quality factor at the 73th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 59% provide a buffer against cost pressures; above-average stability (86th percentile) suggests predictable business dynamics. 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 COLLEGIUM PHARMACEUTICAL, INC's capital allocation as Poor. Key concerns include elevated leverage (485% D/E). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — COLLEGIUM PHARMACEUTICAL, 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, COLLEGIUM PHARMACEUTICAL, INC receives a Hold rating with a composite score of 61.2/100 (rank #579 of 7,333). Our quantitative framework assigns a Narrow Moat (42/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 67/100.

Our analysis supports a neutral stance on COLLEGIUM PHARMACEUTICAL, INC. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.