Equity Research Analysis: Denali Therapeutics Inc. (DNLI)
|Blank Capital Research Unit|Spot: $21.44
Price$21.44
Composite Score41.8/100
RatingREDUCE (2★)
Rank#3306 OF 7,333
Market Cap$2.1B
ROE
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Verdict
Quantitative factor alignment verified for current market regime.
Quant Score
Rank
#3306
Positioning
Market Dominance
Manufacturing
Pharmaceutical Products
$2.1B
Ryan J. Watts
Denali Therapeutics Inc. discovers and develops therapeutic candidates for neurodegenerative diseases in the United States. It offers leucine-rich repeat kinase 2 (LRRK2) inhibitor product candidate product candidate. BIIB122/DNL151, a small molecule inhibitor, is in phase I and phase Ib clinical trials for the treatment of Parkinson's disease.
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| Stock | Rating | Score▼ | Quality | Value | Momentum | P/E | EV/EBITDA | ROE | ROA | Gross Mgn | Op Mgn | Net Mgn | Rev Growth | Div Yield | D/E | Mkt Cap | AUDIT |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
$UL UNILEVER PLC | 78 | 96 | 98 | 59 | - | - | 28.5% | 8.0% | 100.0% | 100.0% | 10.4% | -4.6% | 3.3% | 0.0x | $141.8B | VS | |
$ASML ASML HOLDING NV | 77 | 89 | 86 | 83 | - | - | 46.1% | 16.6% | 51.3% | 31.9% | 26.8% | -4.0% | 1.0% | 25.0x | $272.1B | VS | |
$ESLT ELBIT SYSTEMS LTD | 76 | 81 | 87 | 85 | - | - | 10.3% | 3.1% | 24.1% | 7.2% | 4.7% | 14.3% | 0.8% | 25.0x | $11.4B | VS | |
$MT ArcelorMittal | 75 | 71 | 98 | 85 | - | - | 2.2% | 1.5% | 9.3% | 5.3% | 2.2% | -8.5% | 2.2% | 16.0x | $18.9B | VS | |
$AMAT APPLIED MATERIALS INC /DE | 75 | 85 | 87 | 84 | 20.9x | 13.6x | 35.5% | 19.8% | 48.7% | 29.2% | 24.7% | 4.4% | 0.8% | 32.0x | $181.9B | VS | |
$SIMO Silicon Motion Technology CORP | 75 | 84 | 86 | 85 | - | - | 11.8% | 8.8% | 45.9% | 11.3% | 11.1% | 25.7% | 3.7% | 0.0x | $1.8B | VS | |
$CODA Coda Octopus Group, Inc. | 74 | 83 | 90 | 79 | 16.3x | 11.9x | 7.6% | 7.0% | 66.5% | 17.1% | 15.6% | 39.0% | 0.0% | 0.0x | $115M | VS | |
$GSK GSK plc | 74 | 84 | 90 | 70 | - | - | 22.6% | 4.9% | 71.2% | 12.8% | 9.4% | 1.7% | 5.9% | 124.0x | $72.1B | VS | |
$EFXT Enerflex Ltd. | 74 | 80 | 91 | 83 | - | - | 3.0% | 1.1% | 20.9% | 7.3% | 1.3% | 3.0% | 0.9% | 67.0x | $1.2B | VS | |
$BUD Anheuser-Busch InBev SA/NV | 74 | 84 | 97 | 63 | - | - | 8.2% | 3.5% | 55.3% | 25.9% | 12.4% | 0.7% | 1.7% | 0.0x | $87.0B | VS | |
$DNLI Denali Therapeutics Inc. | 42 | 28 | 30 | 52 | - | - | -53.0% | -46.5% | - | - | - | - | 0.0% | 14.0x | $2.1B | ||
| SECTOR BENCH | - | - | - | - | - | 22.3x | 11.5x | -2.5% | -0.1% | 42.5% | 1.3% | -0.2% | 5.9% | 0.0% | 0.2x | - | REF |
Denali Therapeutics Inc. (DNLI) receives a "Reduce" rating with a composite score of 41.8/100. It ranks #3306 out of 7,333 stocks in our coverage universe and carries a 2-star rating. Ratings are driven by a 6-factor quantitative model measuring quality, value, momentum, investment, stability, and short interest.
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Equity capital efficiency
Asset base utilization
Financial leverage load
Direct cash return
Ryan J. Watts
Chief Executive Officer
Labor Force
430
28
25
46
Audit Verdict: Lower quality and stability scores may indicate governance concerns.
No recent insider transactions available for DNLI
In-line with peers — no strong momentum signal
Expensive relative to fundamentals — limited margin of safety
Weak fundamentals — higher risk of value trap
Average volatility — neutral timing signal
Aggressive spending — empire-building risk, dilutive growth
Mid-range overall rating
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Relative valuation derived from Manufacturing sector benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Re-calculated daily.
No analyst ratings for DNLI.
View All RatingsHigh margin volatility — erratic forensic earnings quality
ROE proxy -53.0% (sector -2.5%)
GM N/A vs sector 43%, OM N/A vs sector 1%
Capital turnover N/A
Rev growth N/A, 8yr history
Interest coverage N/A
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation and elite competitive moats.
Profit generated per dollar of shareholder equity
Efficiency of asset utilization
Pricing power and cost efficiency
Core business profitability
Bottom-line profitability
The Quality factor evaluates the persistence and magnitude of realized cash flows. Companies with scores >70 exhibit superior pricing power and structural financial resilience through diverse economic regimes.
Our uncertainty rating tracks the predictability of future cash flows and potential for permanent capital loss. Moderate visibility with standard industry cyclicality.
Denali Therapeutics Inc. receives a Reduce rating from our analysis, with a composite score of 41.8/100 and 2 out of 5 stars, ranking #3306 out of 7,333 stocks. DNLI's factor profile shows weakness across multiple dimensions, suggesting the stock may underperform going forward. Existing holders may want to consider trimming positions or tightening stop-losses.
DNLI's quality score of 28/100 is below average, suggesting challenges with profitability or capital efficiency. The company reports a return on equity of -53.0% (sector avg: -2.5%). Investors should examine whether management is actively addressing these weaknesses or if they reflect structural industry headwinds.
With a value score of 30/100, DNLI appears somewhat expensive relative to its fundamentals. Key valuation metrics include a P/B ratio of 3.40x. Investors paying a premium here are likely betting on above-average growth or margin expansion to justify current prices.
Denali Therapeutics Inc.'s investment score of 25/100 suggests limited reinvestment activity. Key growth metrics include a return on assets of -46.5% (sector: -0.1%). While this can be positive for mature, cash-generative businesses returning capital to shareholders, it may also signal a lack of growth opportunities or management conservatism.
DNLI demonstrates moderate momentum with a score of 52/100, suggesting a neutral price trend without strong directional conviction. Revenue growth data is not currently available, while a beta of 1.34 reflects its sensitivity to broader market moves. Moderate momentum may indicate the stock is consolidating or transitioning between trends, warranting close monitoring of upcoming catalysts.
With a stability score of 46/100, DNLI exhibits average financial resilience. Key stability metrics include a beta of 1.34 and a debt-to-equity ratio of 14.00x (sector avg: 0.2x). While the balance sheet is not a major concern, the stock is subject to typical market volatility and may experience sharper drawdowns during risk-off episodes.
The short interest score of 43/100 for DNLI suggests somewhat elevated bearish positioning by institutional traders. Specific risk factors include above-average market sensitivity (beta: 1.34), elevated leverage (D/E: 14.00x). With a $2.1B market cap (mid-cap), Denali Therapeutics Inc. may experience above-average volatility. Investors should consider whether the short thesis has merit or if it creates a potential short-squeeze opportunity.
Denali Therapeutics Inc. is a mid-cap company in the Manufacturing sector, ranked #0 of 50 in its sector (100th percentile) and #3306 of 7,333 overall (55th percentile). Key comparisons include ROE of -53.0% trailing the -2.5% sector median. This top-quartile standing reflects exceptional competitive strength relative to Manufacturing peers.
While DNLI currently exhibits a REDUCE profile, superior opportunities exist within the MANUFACTURING sector. Our model identifies several "Strong Buy" candidates with higher quality scores and more attractive valuations among direct industry competitors.
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Improvement in Investment (25) would have the largest impact on the composite score.
ROE 2038% ABOVE SECTOR MEDIAN (FAVORABLE)
Debt/Equity 6900% ABOVE SECTOR MEDIAN
Div. Yield NaN% BELOW SECTOR MEDIAN
AUDIT DATA AS OF SEP 30, 2025 (Q2 FY2025)
We rate Denali Therapeutics Inc. (DNLI) as a Reduce with a composite score of 41.8/100 at a current price of $21.44. 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 momentum (52th percentile) and stability (46th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (25th percentile) and quality (28th percentile) tempers our overall conviction. We assign a No Moat rating (25/100), High uncertainty, and Poor capital allocation.
Key items to watch: valuation compression risk if growth disappoints. 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.
Denali 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 41.8/100 places it at rank #3306 in our full 7,333-stock universe. At $2.1B in market capitalization, Denali Therapeutics Inc. is a mid-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.
Momentum indicators (52th percentile) are neutral regarding the near-term price trend. Revenue growth data is unavailable, limiting our ability to confirm whether momentum is fundamentally supported.
Margin data is not available for Denali Therapeutics Inc., which limits our assessment of the company's cost structure and operating efficiency. We rely on factor-based signals to infer business quality in the absence of detailed margin data.
At a current price of $21.44, Denali Therapeutics Inc. is trading at a premium to fundamental value. Our value factor score of 30/100 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 P/B of 3.4x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.
A conservative balance sheet (14% D/E) provides financial flexibility for acquisitions, buybacks, or weathering economic downturns without dilution.
The Reduce rating (composite 41.8/100) reflects multi-factor weakness, and historically, stocks in this scoring range have underperformed the market by a meaningful margin.
Below-average quality (28th percentile) raises durability concerns about the fundamental profile and increases the risk of negative earnings surprises.
We assign a High uncertainty rating to Denali Therapeutics Inc.. Key risk factors include elevated market sensitivity (beta of 1.34), weak quality scores (28th 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: elevated market sensitivity (beta of 1.34); weak quality scores (28th percentile). 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 46th percentile and quality factor at the 28th percentile provide a quantitative summary of the overall risk landscape.
Key risk mitigants include: conservative leverage (14% 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 warrants caution and disciplined position management.
We rate Denali Therapeutics Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-53.0%), weak asset returns (ROA -46.5%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Denali 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, Denali Therapeutics Inc. receives a Reduce rating with a composite score of 41.8/100 (rank #3306 of 7,333). Our quantitative framework assigns a No Moat (25/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 36/100.
Our analysis does not support a constructive view on Denali Therapeutics Inc. at this time. The combination of limited competitive advantages, 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.
Analysis derived from Blank Capital Research quantitative terminal. For informational purposes only. No trade solicitation. Past performance not indicative of future results. Consult a qualified advisor.
We do not assign Denali Therapeutics Inc. a meaningful economic moat, scoring 25/100 on our composite assessment. Current fundamentals do not demonstrate the kind of durable competitive advantages — such as superior returns on invested capital, margin superiority, or reinvestment efficiency — that would protect the company from competitive erosion over the long term. The highest-scoring pillar, margin superiority, reached only 12.5/20.
The strongest moat sources are margin superiority (12.5/20) and financial resilience (8.5/20). GM N/A vs sector 43%, OM N/A vs sector 1%. Interest coverage N/A. These pillars form the core of Denali Therapeutics Inc.'s competitive identity and are the primary drivers of excess returns in our framework.
Areas of relative weakness include economic value creation (0/20) and reinvestment efficiency (0/20). ROE proxy -53.0% (sector -2.5%). Improvement in these areas could meaningfully widen the moat over time, while deterioration would be an early warning of competitive erosion.
Our moat trend assessment is Stable. Multi-year ROIC and operating margin trajectories show neither meaningful improvement nor deterioration, suggesting the competitive position is steady. We expect Denali Therapeutics Inc.'s moat profile to remain largely unchanged absent a material shift in return on capital or industry dynamics.
Key profit drivers are not clearly identifiable from current fundamentals. This may reflect a company in transition, a cyclical downturn, or structural challenges in the business model. We assign a quality factor of 28/100 which further underscores our concern regarding earnings sustainability.
Return metrics include ROE of -53.0% and ROA of -46.5%. Relative to the Manufacturing sector, sector comparison data is limited, and ROE of -53.0% compares to a sector median of -2.5%.
The balance sheet reflects a conservatively managed balance sheet with D/E of 14%. The sector median D/E is 0%, putting Denali Therapeutics Inc. at higher leverage than the typical peer. Overall balance sheet health is adequate for the current business environment.
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Above 50MA
37.18%
Net New Highs
+51081