ImmunoCellular Therapeutics Ltd (AMEX:IMUC), a $9.64M small-cap, is a healthcare company operating in an industry, which faces key trends such as rising demand fuelled by an aging population and the growing prevalence of chronic diseases. Healthcare analysts are forecasting for the entire industry, a fairly unexciting growth rate of 1.58% in the upcoming year , and an enormous growth of 39.93% over the next couple of years. Not surprisingly, this rate is more than double the growth rate of the US stock market as a whole. Today, I will analyse the industry outlook, and also determine whether ImmunoCellular Therapeutics is a laggard or leader relative to its healthcare sector peers. View our latest analysis for ImmunoCellular Therapeutics
What’s the catalyst for ImmunoCellular Therapeutics’s sector growth?
Data analytics and other technology-enabled approaches are creating opportunities for innovations, however, stakeholders have been challenged to keep abreast of this structural shift while under pressure to cut costs. In the past year, the industry delivered growth in the teens, beating the US market growth of 10.48%. ImmunoCellular Therapeutics 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 ImmunoCellular Therapeutics may be trading cheaper than its peers.
Is ImmunoCellular Therapeutics and the sector relatively cheap?
The biotech industry is trading at a PE ratio of 27x, above the broader US stock market PE of 20x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry did return a higher 16.12% compared to the market’s 10.47%, which may be indicative of past tailwinds. Since ImmunoCellular Therapeutics’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge ImmunoCellular Therapeutics’s value is to assume the stock should be relatively in-line with its industry.
Next Steps:
ImmunoCellular Therapeutics recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. If the stock has been on your watchlist for a while, now may be the time to buy, if you like its ability to deliver growth and are not highly concentrated in the healthcare industry. However, before you make a decision on the stock, I suggest you look at ImmunoCellular Therapeutics’s fundamentals in order to build a holistic investment thesis.