IOBT

We rate IO Biotech, Inc. (IOBT) as Avoid with a composite score of 17.9/100 at a current price of $0.33. 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 (29th percentile) and investment (25th percentile), which together account for the majority of the composite score. Offsetting weakness in value (5th percentile) and momentum (6th percentile) tempers our overall conviction. We assign a No Moat rating (15/100), High uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress; 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.

IO Biotech, 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 17.9/100 places it at rank #4857 in our full 7,333-stock universe. At $24M in market capitalization, IO Biotech, Inc. is a small-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

Momentum indicators (6th percentile) suggest caution 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 IO Biotech, 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 $0.33, IO Biotech, Inc. is trading at a premium to fundamental value. Our value factor score of 5/100 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 26.9x. 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 IO Biotech, Inc.. Key risk factors include significant leverage (4286% debt-to-equity), below-average price stability (29th percentile), weak quality scores (14th 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 (4286% debt-to-equity); below-average price stability (29th percentile); weak quality scores (14th percentile); low beta of 0.33 — 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 29th percentile and quality factor at the 14th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our high uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate IO Biotech, Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-8894.7%), elevated leverage (4286% D/E), weak asset returns (ROA -202.8%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — IO Biotech, 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, IO Biotech, Inc. receives a Avoid rating with a composite score of 17.9/100 (rank #4857 of 7,333). Our quantitative framework assigns a No Moat (15/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 16/100.

Our analysis does not support a constructive view on IO Biotech, 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.