Antisense Therapeutics Limited (ASX:ANP), a AUDA$5.17M small-cap, operates in the healthcare industry, which continues to endure a more demanding healthcare agenda, and the global need for innovative, cost-effective medicines continues to rise. Healthcare analysts are forecasting for the entire industry, an extremely robust growth of 37.42% in the upcoming year , and a massive triple-digit earnings growth over the next couple of years. Not surprisingly, this rate is more than double the growth rate of the Australian stock market as a whole. Today, I will analyse the industry outlook, and also determine whether ANP is a laggard or leader relative to its healthcare sector peers. See our latest analysis for ANP

What’s the catalyst for ANP’s sector growth?

Companies operating in the pharmaceutical sector are confronted with ways to improve R&D productivity, increase the efficiency of its operations, rationalise spending on sales and marketing and enhance financial performance. Over the past year, the industry saw growth in the teens, beating the Australian market growth of 5.37%. ANP lags the pack with its sustained negative earnings over the past couple of years. The company’s outlook seems uncertain, with a lack of analyst coverage, which doesn’t boost our confidence in the stock. This lack of growth and transparency means ANP may be trading cheaper than its peers.

Is ANP and the sector relatively cheap?

The pharmaceutical sector’s PE is currently hovering around 24x, above the broader Australian stock market PE of 17x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry returned a similar 13.02% on equities compared to the market’s 11.92%. Since ANP’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge ANP’s value is to assume the stock should be relatively in-line with its industry.

What this means for you:

Are you a shareholder? ANP has been a pharmaceutical industry laggard in the past year. If your initial investment thesis is around the growth prospects of ANP, there are other pharmaceutical companies that have delivered higher growth, and perhaps trading at a discount to the industry average. Consider how ANP fits into your wider portfolio and the opportunity cost of holding onto the stock.

Are you a potential investor? If ANP has been on your watchlist for a while, now may be a good time to dig deeper into the stock. Although its growth has delivered lower growth relative to its pharmaceutical peers in the near term, the market may be pessimistic on the stock, leading to a potential undervaluation. Before you make a decision on the stock, I suggest you look at ANP’s future cash flows in order to assess whether the stock is trading at a reasonable price.

For a deeper dive into Antisense Therapeutics’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other healthcare stocks instead? Use our free playform to see my list of over 1000 other healthcare companies trading on the market.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.