Is Affimed NV Set to Underperform? Analyzing the Factors Limiting Growth
Long-established in the Biotechnology industry, Affimed NV (NASDAQ:AFMD) has enjoyed a stellar reputation. It has recently witnessed a surge of 16.12%, juxtaposed with a three-month change of -37.91%. However, fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Affimed NV.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
1. Financial strength rank: 5/10
2. Profitability rank: 2/10
3. Growth rank: 6/10
4. GF Value rank: 2/10
5. Momentum rank: 4/10
Based on the above method, GuruFocus assigned Affimed NV the GF Score of 61 out of 100, which signals poor future outperformance potential.
Introducing Affimed NV
Affimed NV is a clinical-stage biopharmaceutical company with a market cap of $89.6 million. The company is engaged in discovering and developing targeted cancer immunotherapies. Its product candidates are being developed in the field of immuno-oncology, which represents an approach to cancer treatment that seeks to harness the body's immune defenses to fight tumor cells. The company is also developing single and combination therapies to treat cancers and other life-threatening diseases. Geographically, it derives a majority of revenue from the United States and also has a presence in Europe and Germany.
Financial Strength Breakdown
Affimed NV's financial strength indicators present some concerning insights about the company's balance sheet health. Affimed NV has an interest coverage ratio of 0, which positions it worse than 0% of 388 companies in the Biotechnology industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. It's worth noting that the esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
The company's Altman Z-Scoreis just -5.39, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years.
Profitability Breakdown
Affimed NV's low Profitability rank can also raise warning signals. Affimed NV's Operating Margin has declined over the past five years ((-1,264,294.00%)), as shown by the following data: 2018: -88.73; 2019: -152.62; 2020: -123.40; 2021: -161.02; 2022: -215.16; .
With a Piotroski F-Score of 2, Affimed NV's financial health appears concerning. This score, rooted in Joseph Piotroski's nine-point scale, evaluates a firm's profitability, liquidity, and operating efficiency. Given its rating, Affimed NV might be facing challenges in these areas.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While Affimed NV has made significant strides in the biotechnology industry, its current financial health and profitability metrics suggest that it may struggle to maintain its historical performance. As value investors, it's crucial to consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
