Does Ironwood's Bullish 2026 View Signal Greater Linzess Adoption?

Ironwood Pharmaceuticals IRWD has been witnessing improved demand for its sole marketed product, Linzess (linaclotide), in recent quarters. The company markets Linzess in the United States in collaboration with drug giant AbbVie ABBV.

Linzess is approved for the treatment of irritable bowel syndrome with constipation (IBS-C) in adults and pediatric patients aged seven years and above. The drug is also approved for treating functional constipation in children and adolescents aged six to 17 years.

Ironwood also has agreements with Astellas Pharma and AstraZeneca AZN related to the development and commercialization of Linzess in Japan and China, respectively. Both companies pay royalties to Ironwood on net Linzess revenues earned in their regions.

These collaborations act as one of the sources of revenue in the form of royalties for Ironwood.

Ironwood’s top line primarily comprises revenues recorded under its collaborative arrangements with ABBV for the development and commercialization of Linzess in the United States.

IRWD and ABBV equally share Linzess’ brand collaboration profits and losses in the country.

IRWD Posts Upbeat 2026 Outlook on Strong Linzess Performance

Linzess sales picked up momentum in the second half of 2025 on the back of increasing demand and the same is likely to have continued in the fourth quarter as well. In the first nine months of 2025, Ironwood’s share of net profit from Linzess sales in the United States was $244.1 million.

Ironwood expects a significant improvement in Linzess’ sales in 2026 and subsequently its share of net profit from the sales of this partnered drug in the United States. The company is also focusing on Linzess’ label expansion efforts to support long-term growth.

Also, with effect from Jan. 1, 2026, Linzess’ list price has been reduced to help maintain patient access. As a result, management expects Linzess' net sales to increase year over year in 2026.

Reflecting the strong demand for Linzess, Ironwood expects total revenues of $450 million to $475 million in 2026. The revenue outlook for 2026 indicates an increase of 54% year over year at the midpoint compared with 2025.

The company also expects to deliver an adjusted EBITDA of more than $300 million in 2026, reflecting effective cost management.

The optimism and growing confidence around Linzess’ adoption are expected to support Ironwood’s long-term growth in 2026.

As previously stated, Ironwood continues to expect revenues of $290-$310 million for 2025, as well as deliver an adjusted EBITDA of more than $135 million.

IRWD's Price Performance, Valuation and Estimates

In the past six months, shares of Ironwood have skyrocketed 457.2% against the industry’s decline of 0.3%. The stock has also outperformed the sector and the S&P 500 during the same time frame, as seen in the chart below.

From a valuation standpoint, Ironwood is trading at a premium to the industry. Going by the price-to-sales (P/S) ratio, the company’s shares currently trade at 2.35, higher than 2.28 for the industry. The stock is trading below its five-year mean of 4.08.

The Zacks Consensus Estimate for 2025 earnings per share (EPS) has remained stable at 16 cents over the past 60 days. During the same time frame, EPS estimates for 2026 have increased from 47 cents to 76 cents.

IRWD's Zacks Rank

Ironwood currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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