Value
8.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 9.6 |
| P/S | 9.0 |
| EV/EBITDA | 8.6 |
| Fwd P/E | 10.0 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 3.0x
- ▸PEG: 0.02
- ▸Attractively valued
IRWD · Why this verdict
Why Ironwood Pharmaceuticals (IRWD) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score7.3/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Ironwood exhibits high-quality business characteristics with strong margins of 28% and an elite Rule of 40 score of 173, indicating strong profitability combined with growth. Quality breakdown | Gross and operating margins should hold near current levels or improve, keeping the quality score (8.3/10) elevated over the next 12 months. | →Stable |
| CounterThe earnings quality warning citing only 50% FCF/NI conversion suggests reported margins may not be fully backed by cash generation, raising doubt about sustainability. | ||
Ironwood trades at a deeply discounted valuation, with a forward P/E of 3.0x and a PEG ratio of 0.02, despite delivering 159% YoY growth, suggesting the market has not priced in the company's growth. Valuation breakdown | Forward P/E and PEG ratio should re-rate upward toward peer averages, or the value score (currently 9.1/10) should hold as price appreciates toward the analyst target. | →Stable |
| CounterA forward P/E this low could reflect market skepticism about earnings durability or one-time items inflating the growth figure rather than a genuine mispricing. | ||
The stock shows positive technical momentum, trading above its 200-day moving average with rising on-balance volume, supporting a momentum score of 7.1/10. Momentum breakdown | Price should continue holding above the 200-day moving average and OBV should keep rising over the next 12 months, sustaining or improving the momentum score. | →Stable |
| CounterThe stock is already overbought (RSI 73), which historically precedes short-term pullbacks that could break moving-average support. | ||
The engine's V9 risk framework blocked a BUY_NOW verdict because the risk/reward ratio of 1.3x at spot falls short of the 1.5x minimum threshold, signaling the current entry does not offer sufficiently asymmetric upside versus downside. Engine gate (failed) | The asymmetry ratio should rise above the 1.5x minimum threshold (from the current 1.32x) as price pulls back toward the entry target, clearing the gate for a BUY_NOW verdict. | →Stable |
| CounterIf the stock continues rallying without a pullback, the asymmetry ratio may never clear the 1.5x threshold, permanently locking the thesis out of an actionable entry. | ||
Elevated short interest of 11% combined with a bearish insider signal (net sells of $80,460 in the last 90 days with zero buys) represents an elevated risk factor despite otherwise strong fundamentals. Insider transaction read | Short interest should decline from 11% and insider transactions should shift away from a BEARISH signal over the next 12 months if the bullish thesis holds. | →Stable |
| CounterContinued insider selling and persistently high short interest could reflect informed skepticism about the company's prospects that outweighs the quantitative screen's optimism. | ||
Ironwood exhibits high-quality business characteristics with strong margins of 28% and an elite Rule of 40 score of 173, indicating strong profitability combined with growth.
→StableQuality breakdown
- Expectation
- Gross and operating margins should hold near current levels or improve, keeping the quality score (8.3/10) elevated over the next 12 months.
CounterThe earnings quality warning citing only 50% FCF/NI conversion suggests reported margins may not be fully backed by cash generation, raising doubt about sustainability.
Ironwood trades at a deeply discounted valuation, with a forward P/E of 3.0x and a PEG ratio of 0.02, despite delivering 159% YoY growth, suggesting the market has not priced in the company's growth.
→StableValuation breakdown
- Expectation
- Forward P/E and PEG ratio should re-rate upward toward peer averages, or the value score (currently 9.1/10) should hold as price appreciates toward the analyst target.
CounterA forward P/E this low could reflect market skepticism about earnings durability or one-time items inflating the growth figure rather than a genuine mispricing.
The stock shows positive technical momentum, trading above its 200-day moving average with rising on-balance volume, supporting a momentum score of 7.1/10.
→StableMomentum breakdown
- Expectation
- Price should continue holding above the 200-day moving average and OBV should keep rising over the next 12 months, sustaining or improving the momentum score.
CounterThe stock is already overbought (RSI 73), which historically precedes short-term pullbacks that could break moving-average support.
The engine's V9 risk framework blocked a BUY_NOW verdict because the risk/reward ratio of 1.3x at spot falls short of the 1.5x minimum threshold, signaling the current entry does not offer sufficiently asymmetric upside versus downside.
→StableEngine gate (failed)
- Expectation
- The asymmetry ratio should rise above the 1.5x minimum threshold (from the current 1.32x) as price pulls back toward the entry target, clearing the gate for a BUY_NOW verdict.
CounterIf the stock continues rallying without a pullback, the asymmetry ratio may never clear the 1.5x threshold, permanently locking the thesis out of an actionable entry.
Elevated short interest of 11% combined with a bearish insider signal (net sells of $80,460 in the last 90 days with zero buys) represents an elevated risk factor despite otherwise strong fundamentals.
→StableInsider transaction read
- Expectation
- Short interest should decline from 11% and insider transactions should shift away from a BEARISH signal over the next 12 months if the bullish thesis holds.
CounterContinued insider selling and persistently high short interest could reflect informed skepticism about the company's prospects that outweighs the quantitative screen's optimism.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Ironwood screens as a statistically cheap, high-quality growth business with elite margins and positive technical momentum, but the engine's own risk/reward gate and bearish insider/short-interest signals argue for a smaller starter position until the asymmetry improves.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
8.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROA | 10.0 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 5.2 |
| FCF quality | 4.0 |
| Moat | 7.0 |
| Rule of 40 | 9.5 |
| Piotroski F | 8.9 |
- ▸Strong margins: 28%
- ▸Earnings quality warning: 50% FCF/NI
- ▸Rule of 40: 173 (elite)
- ▸Strong Piotroski F-Score: 8/9
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 159% YoY
Momentum
8.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.0 |
| MACD | 8.4 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 8.7 |
- ▸Overbought (RSI 79)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.0 |
| Analyst rating | 5.0 |
| Price target | 8.4 |
- ▸Analyst upside: 28%
Insider
3.2/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 1.5 |
- ▸Insider selling (low materiality) — $80,460 (0.011% of mkt cap)
- ▸Institutions reducing
Peer rank
7.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.5 |
| quality rank | 9.3 |
| growth rank | 9.8 |
- ▸Attractive P/E vs peers
- ▸Best-in-class margins
Technical
2.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.6 |
| 52w position | 6.5 |
| gap | 4.0 |
Risk (lower is worse)
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.7 |
| days to cover | 3.1 |
| volatility | 0.0 |
| put call | 10.0 |
| implied vol | 0.1 |
| beta | 10.0 |
- ▸High IV: 79%
Catalyst
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 5.6 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 6.0 |
How the verdict was assembled
Engine trigger
V9 Gate blocked: R/R 0.6x at spot < 1.5 minimum. Wait for improvement.
Engine technical detail
verdict_path:
L4:PATH_A_VALUE_MOS33->V9:POOR_ASYMMETRY|ENTRY_STICKY:PRIOR_STILL_VIABLEPassed (8)
- MOMENTUM:8.0>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:29d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
- SECTOR_CONCENTRATION_CAP:sector=Healthcare:4/10
Failed (1)
- ASYMMETRY:0.6<1.5@spot
Warning (0)
none
Reward-to-Risk
0.58
Upside
+8.7%
Downside
15.0%
Sizing output
STARTER
Setup— — No clear chart pattern; technical signals are mixed
EdgeInst Constrain — Small cap ($0.7B) below institutional reach
SuitabilityAggressive — MCap $0.7B<$5B
Investment implication
The STRONG_BUY_WAIT verdict reflects the ASYMMETRY gate's 0.6<1.5@spot outcome against Growth at 10.0 and asymmetric R:R of 0.58.
The strongest dimensions are Growth at 10.0, Value at 8.8, and Quality at 8.3; the weakest are Technical at 2.8, Insider at 3.2, and Risk (lower is worse) at 4.6. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of 0.58 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Deep Value Mispricing
Trip ifForward P/E rises above 10x from the current 3.0x, eliminating the value gap.
- P2High Quality Margin Profile
Trip ifRule of 40 score falls below 100 from the current 173, or gross margin falls below 20% from the current 28%.
- P3Technical Momentum Above 200dma
Trip ifPrice closes below the 200-day moving average for more than 5 consecutive trading days.
- P4Asymmetry Gate Blocked Risk
Trip ifAsymmetry ratio stays below 1.5x for more than 2 consecutive quarters.
- P5Insider Selling Short Interest Risk
Trip ifShort interest rises above 20% from the current 11%, or insider sell value exceeds $500,000 in a single quarter.