PASG

We rate Passage BIO, Inc. (PASG) as a Reduce with a composite score of 43.9/100 at a current price of $9.13. 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 (74th percentile) and investment (36th percentile), which together account for the majority of the composite score. Offsetting weakness in stability (13th percentile) and value (23th percentile) tempers our overall conviction. We assign a No Moat rating (27/100), Very High uncertainty, and Poor capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends; 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.

Passage BIO, 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 43.9/100 places it at rank #2979 in our full 7,333-stock universe. At $26M in market capitalization, Passage BIO, Inc. is a small-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

Despite positive momentum (74th percentile), revenue contraction of -100% creates a divergence between price action and fundamental trajectory. This divergence suggests either that the market is looking through near-term weakness or that technical factors are temporarily inflating the stock. Investors should assess whether the revenue decline reflects cyclical weakness or structural challenges.

Margin data is not available for Passage BIO, 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 $9.13, Passage BIO, Inc. is trading at a premium to fundamental value. Our value factor score of 23/100 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 0.9x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a Very High uncertainty rating to Passage BIO, Inc.. The stock exhibits multiple compounding risk factors: elevated market sensitivity (beta of 2.62), significant leverage (138% debt-to-equity), below-average price stability (13th percentile). The extreme uncertainty around future cash flows makes precise valuation difficult, and the range of outcomes is exceptionally wide. Only investors with high risk tolerance and extended time horizons should consider this name.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 2.62); significant leverage (138% debt-to-equity); below-average price stability (13th percentile); 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 13th percentile and quality factor at the 28th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our very 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 Passage BIO, Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-166.7%), weak asset returns (ROA -70.0%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Passage BIO, 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, Passage BIO, Inc. receives a Reduce rating with a composite score of 43.9/100 (rank #2979 of 7,333). Our quantitative framework assigns a No Moat (27/100, trend: stable), Very High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 35/100.

Our analysis does not support a constructive view on Passage BIO, Inc. at this time. The combination of limited competitive advantages, very 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.