Advaxis Inc (NASDAQ:ADXS): How Much Growth Is Left In Healthcare?
Advaxis Inc (NASDAQ:ADXS), a US$53.9m small-cap, operates in the healthcare 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 1.5% in the upcoming year , and a massive growth of 54.5% over the next couple of years. This rate is larger than the growth rate of the US stock market as a whole. Today, I’ll take you through the sector growth expectations, and also determine whether Advaxis is a laggard or leader relative to its healthcare sector peers.
View our latest analysis for Advaxis
What’s the catalyst for Advaxis’s sector growth?
Data analytics is creating opportunities for innovations, however, stakeholders are challenged with the pressure of reducing costs. Over the past year, the industry saw growth in the thirties, beating the US market growth of 15.5%. Advaxis lags the pack with its negative growth rate of -18.5% over the past year, which indicates the company has been growing at a slower pace than its biotech peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of 30.7% in the upcoming year. This future growth may make Advaxis a more expensive stock relative to its peers.
Is Advaxis and the sector relatively cheap?
Biotech companies are typically trading at a PE of 24.74x, in-line with the US stock market PE of 19.86x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a higher 22.1% compared to the market’s 10.6%, potentially illustrative of past tailwinds. Since Advaxis’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Advaxis’s value is to assume the stock should be relatively in-line with its industry.
Next Steps:
Advaxis’s industry-beating future is a positive for investors. If Advaxis has been on your watchlist for a while, now may be the time to enter into the stock, if you like its growth prospects and are not highly concentrated in the biotech industry. However, before you make a decision on the stock, I suggest you look at Advaxis’s fundamentals in order to build a holistic investment thesis.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Historical Track Record: What has ADXS’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Advaxis? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
