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Biotage AB (STO:BIOT), which is in the life sciences business, and is based in Sweden, saw significant share price movement during recent months on the OM, rising to highs of SEK137 and falling to the lows of SEK108.1. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Biotage's current trading price of SEK108.1 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Biotage’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Biotage
What's the opportunity in Biotage?
According to my relative valuation model, the stock seems to be currently fairly priced. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Biotage’s ratio of 41.15x is trading slightly above its industry peers’ ratio of 37.28x, which means if you buy Biotage today, you’d be paying a relatively reasonable price for it. And if you believe Biotage should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, it seems like Biotage’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Biotage look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 25% over the next couple of years, the future seems bright for Biotage. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in BIOT’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at BIOT? Will you have enough confidence to invest in the company should the price drop below its fair value?