Is RARE a good stock to buy?We came across a bullish thesis on Ultragenyx Pharmaceutical Inc. on r/ValueInvesting by u/Tallwhitedude123. Since the thesis was published on August 30th, RARE shares have pulled back as a key pipeline setback shifted investor focus to whether its approved drugs can drive enough growth to offset the lost opportunity. In this article, we will summarize the bulls' thesis on RARE. Ultragenyx Pharmaceutical Inc.'s share was trading at $16.78 as of October 29th 2026.
This isn't the first time we see a rare disease drug developer pitched as a great investment. Unfortunately, RARE shares lost 27.04% of their value year to date. Comparable stocks like PTC Therapeutics and Sarepta Therapeutics lost 15.14% and 10.64% of their value, respectively, during the same period. RARE's steeper decline may partly reflect the failure of its experimental Angelman syndrome treatment in a late-stage trial, dealing a blow to a major growth opportunity. Why are rare disease stocks declining so much and has the sell-off made RARE a buying opportunity, or does rebuilding confidence require more than a lower share price?
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In March, we published an article about the 7 Best Small-Cap Healthcare Stocks to Buy According to Hedge Funds and RARE ranked 5th in that article. Btw, the #1 stock in that list returned 54.74% since then. So, hedge funds were right about their #1 pick but RARE, which lost ground since then, was a disappointment. This article explores whether Ultragenyx's newly approved $2.7 million gene therapy can become a commercial success. Before getting into our analysis, let's take a look at the business and why some investors like the stock so much.
Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) is a biotech company that develops treatments for rare and ultra-rare genetic diseases, and it already has four approved medicines generating revenue. Right now, the market seems focused on the company's lack of profits and the chance it may need to raise more cash, while largely overlooking the value of its existing products and its promising pipeline. Ultragenyx is valued at about $2.6 billion, compared with $717 million in revenue over the past year. But a few upcoming events — two regulatory decisions and results from a major clinical trial — could change how investors view the company's long-term earning power.
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The bullish argument is simple: Ultragenyx already earns real revenue, yet investors are giving little credit to its pipeline of future treatments. Two FDA decisions are expected within the next month — one for UX111, aimed at Sanfilippo syndrome type A, and another for DTX401, targeting a metabolic disorder called glycogen storage disease. Together, these two drugs could address a market worth an estimated $400 million to $700 million, adding new revenue streams if approved.
The company's biggest opportunity, though, is GTX-102, a late-stage treatment for Angelman syndrome with results expected around October or November. This drug targets a market estimated at $1.2 billion to $1.5 billion, and based on earlier trial data, the odds of approval currently look close to a coin flip. Strong results this time would boost confidence in the drug and open the door to a meaningful new revenue stream once it reaches the market.
Management expects Ultragenyx to become profitable by 2027, a milestone that would ease worries about the company needing to sell more shares to raise cash. That risk of dilution is one of the main reasons investors have stayed cautious. If the company ends up needing less funding than feared, or shows a clearer path to paying its own way, sentiment could improve. Since the market appears to be pricing in significant financing risk already, any progress toward self-sufficiency alongside pipeline progress could make the stock more attractive ( see how Fayuvi's approval affects Ultragenyx's 2027 profitability target ).
Growth won't only come from Ultragenyx's current products — its pipeline could become an even bigger driver over time. UX111 and DTX401 face little to no direct competition, giving them room to become first movers in their markets. GTX-102 does compete with programs from Biogen and Ionis, but it has shown strong results so far in improving motor function and cognition. The key question is whether Ultragenyx can turn these pipeline candidates into successful, revenue-generating products.
The main risks are the usual ones for a biotech: trials could disappoint, approvals could be delayed, and more funding could be needed on unfavorable terms. Even a successful therapy still has to clear hurdles around manufacturing, pricing, and getting doctors and patients to adopt it.
Another risk for the stock is that revenue growth overstates the cash available to fund the business. Ultragenyx has raised money upfront by selling portions of its future Crysvita royalties, trading future income for immediate funding. Its filings show that royalties sold to investors continue to appear in reported revenue even though the associated cash goes elsewhere. This means higher sales do not translate dollar for dollar into cash Ultragenyx can retain. Additional royalty payments are scheduled to begin flowing to OMERS in January 2028, subject to the agreement's terms. These commitments could constrain funding for research and launches even as reported results improve. In our opinion, the recovery deserves greater confidence only when retained cash flow supports the promised path toward self-sufficiency.
The rare disease opportunity is real, but much of Ultragenyx's future value hinges on a small number of upcoming catalysts. Positive regulatory decisions on UX111 and DTX401, strong Phase 3 data for GTX-102, and visible progress toward profitability are what would prove the stock's current price doesn't fully reflect its long-term potential.
Hedge fund positioning shows a mixed but cautious signal. As per our database, 50 hedge fund portfolios held Ultragenyx Pharmaceutical Inc. at the end of the second quarter, down from 55 in the previous quarter. This decline suggests institutional interest softened, even as upcoming clinical and regulatory developments remain central to its growth outlook. By comparison, BioMarin Pharmaceutical (NASDAQ:BMRN) was held by 54 hedge funds, down from 62, Sarepta Therapeutics (NASDAQ:SRPT) was held by 37 hedge funds, down from 41, and PTC Therapeutics (NASDAQ:PTCT) was held by 44 hedge funds, up from 33. PTC Therapeutics stood out as the only one of these companies to see hedge fund interest rise, while the others saw pullbacks, suggesting institutional enthusiasm cooled across much of the group despite Ultragenyx's upcoming pipeline catalysts.
Short interest data also paints a fairly concerning picture for Ultragenyx Pharmaceutical Inc. relative to its peers. About 21.13% of Ultragenyx Pharmaceutical Inc.'s float is sold short, above BioMarin Pharmaceutical Inc. and PTC Therapeutics, Inc. at 13.49% each, but below Sarepta Therapeutics, Inc. at 25.34%. This suggests Ultragenyx Pharmaceutical Inc. is drawing more skepticism than BioMarin Pharmaceutical Inc. and PTC Therapeutics, Inc., while bearish bets remain less aggressive than those against Sarepta Therapeutics, Inc., as investors weigh profitability, pipeline execution, and future financing needs.
Valuation Analysis
RARE's EV/Revenue is 1.91x. PTC Therapeutics, Inc., BioMarin Pharmaceutical Inc., and Sarepta Therapeutics, Inc. trade at EV/Revenue multiples of 3.81x, 4.16x, and 1.16x, respectively. RARE's own EV/Revenue was 2.91x on December 31, 2025, making its current multiple approximately 34% lower. We believe the current valuation reflects significant investor concerns about continuing losses, clinical and regulatory uncertainty, and the potential need to raise additional capital. However, the discount to PTC and BioMarin appears substantial given Ultragenyx's growing commercial revenue, although its premium to Sarepta means the peer comparison is mixed. Ultragenyx's revenue increased approximately 28% to $214 million in the second quarter of 2026, while its net loss narrowed from $115 million to $92 million, showing progress toward profitability despite substantial remaining losses. We believe RARE can justify its current valuation if revenue continues growing faster than expenses, reducing its dependence on external funding. If Ultragenyx sustains commercial growth and converts pipeline progress into additional product revenue without substantial dilution, the current valuation could offer an attractive entry point despite the risks surrounding its path to profitability.
Previously, we covered a bullish thesis on AbbVie Inc. (ABBV) by Magnus Ofstad in May 2025, which highlighted the company's immunology growth, pipeline strength, and strategic acquisitions. ABBV's stock price has appreciated by approximately 46.51% since our coverage.We believe RARE's current valuation could offer an attractive entry point if its upcoming regulatory and clinical catalysts support revenue growth and retained cash flow improves enough to reduce funding needs, despite the risks of trial setbacks and dilution.
Ultragenyx Pharmaceutical is not on our list of the 40 Most Popular Stocks Among Hedge Funds . While RARE could offer long-term upside if regulatory decisions and GTX-102 results support its path toward profitability, we believe certain AI infrastructure stocks offer far stronger long-term potential at a much more attractive entry point. If you are looking for an AI stock more promising than RARE that operates as a critical AI tollboothand stands as the most important company in the world, check out our report about this must-own AI stock .
Disclosure: None.
