IRWD Rises 307% in 6 Months: Is This an Indication to Buy the Stock?

Shares of Ironwood Pharmaceuticals IRWD have risen sharply over the past six months, primarily driven by the improving demand for its sole marketed product, Linzess (linaclotide) and the company’s upbeat 2026 revenue guidance. The stock has skyrocketed 307.3% over the past six months, while the industry has decreased 1.7%. IRWD shares have also outperformed the sector and the S&P 500 Index in this timeframe, as seen in the chart below.

IRWD Outperforms Industry, Sector & S&P 500 Index

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.

Reflecting the increasing demand for Linzess, especially during the second half of 2025, Ironwood announced an upbeat revenue guidance for 2026 last month. The company also outlined key pipeline goals for 2026.

Let’s analyze Ironwood’s strengths and weaknesses to understand how to play the stock amid the recent share price rally.

IRWD’s Strong Partnerships for Linzess Aids Revenue

Ironwood markets Linzess in the United States in collaboration with drug giant AbbVie ABBV. The companies equally share Linzess’ brand collaboration profits and losses in the United States.

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.

In the first nine months of 2025, Ironwood’s share of net profit from Linzess sales in the United States was $244.1 million. Sales of the drug have been rising owing to strong demand growth in the United States, and we expect the momentum to continue in 2026.

Ironwood also has partnerships with Astellas Pharma and AstraZeneca AZN for the development and commercialization of Linzess in Japan and China, respectively.

Under these agreements, Ironwood receives royalty payments from these companies based on net Linzess sales in those markets, providing a steady source of royalty revenues.

IRWD’s Upbeat 2026 Outlook on Linzess Demand

Linzess sales picked up momentum in the second half of 2025 on the back of increasing demand. Building on this momentum, 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.

Ironwood expects total revenues of $450-$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, indicating effective cost management.

Effective Jan. 1, 2026, Linzess’ list price was reduced to help maintain patient access. Despite the price cut, management expects Linzess’ net sales to increase year over year in 2026, as the lower list price will reduce certain mandatory government rebates. Fewer rebate payments should translate into higher net revenues in 2026.

Ironwood is also focusing on Linzess’ label expansion studies to support long-term growth.

IRWD's Key Pipeline Update

Besides Linzess, Ironwood is also making good progress with the development of apraglutide, its next-generation GLP-2 analog.

The company is developing apraglutide for treating patients with short bowel syndrome (“SBS”) with intestinal failure (“IF”) who are dependent on parenteral support (PS). The company recently met with the FDA to align on a confirmatory phase III study design of apraglutide for the treatment of short bowel syndrome with intestinal failure (SBS-IF).

Ironwood remains on track to initiate a confirmatory study on apraglutide for the given indication in the first half of 2026.

Ironwood acquired the rights to develop and commercialize apraglutide following the acquisition of VectivBio in June 2023.

IRWD’s Valuation and Estimate Revision

From a valuation standpoint, Ironwood is trading at a premium to the industry. Going by the price-to-sales (P/S) ratio, the stock currently trades at 2.33 times trailing 12-month sales value, higher than 2.31 times for the industry. However, the stock is trading below its five-year mean of 4.06.

The Zacks Consensus Estimate for 2026 earnings per share (EPS) has increased from 47 cents to 76 cents over the past 30 days.

Bet on IRWD Stock

We remain optimistic about Ironwood and suggest prospective investors add this Zacks Rank #1 (Strong Buy) stock to their portfolios for meaningful gains in both the short and long term. You can see the complete list of today’s Zacks #1 Rank stocks here.

Although it is trading at a premium compared to the industry, IRWD’s recent price rally, buoyed by the increasing demand for Linzess and the upbeat guidance for 2026, presents an optimistic outlook.

Ironwood’s approach of strengthening the Linzess franchise while progressing apraglutide, which has blockbuster potential, positions it for long-term growth and profitability. Rising earnings estimates also indicate analysts' optimistic outlook for the stock.

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

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