What’s Ahead For Medicure Inc (CVE:MPH)?
Medicure Inc (TSXV:MPH), a CA$115.91M small-cap, operates in the healthcare industry, which has experienced tailwinds from issues such as higher demand driven by an aging population and the increasing prevalence of diseases and comorbidities. Healthcare analysts are forecasting for the entire industry, negative growth in the upcoming year , and a strong near-term growth of 15.87% over the next couple of years. This rate is larger than the growth rate of the Canadian stock market as a whole. Today, I will analyse the industry outlook, and also determine whether Medicure is a laggard or leader relative to its healthcare sector peers. Check out our latest analysis for Medicure
What’s the catalyst for Medicure’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 of over 50%, beating the Canadian market growth of 13.22%. Medicure leads the pack with its impressive earnings growth of over 100% last year. However, analysts are not expecting this industry-beating trend to continue, with future growth expected to be -69.41% compared to the wider biotech sector growth hovering next year.
Is Medicure and the sector relatively cheap?
The biotech industry is trading at a PE ratio of 15.46x, relatively similar to the rest of the Canadian stock market PE of 16.23x. 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 17.87% compared to the market’s 9.14%, potentially illustrative of past tailwinds. On the stock-level, Medicure is trading at a lower PE ratio of 4.27x, making it cheaper than the average biotech stock. In terms of returns, Medicure generated 113.29% in the past year, which is 95.42% over the biotech sector.
Next Steps:
Medicure is a biotech industry laggard in terms of its future growth outlook. This is possibly reflected in the PE ratio, with the stock trading below its peers. If the stock has been on your watchlist for a while, now may be the time to dig deeper. Although the market is expecting lower growth for the company relative to its peers, Medicure is also trading at a discount, meaning that there could be some value from a potential mispricing. However, before you make a decision on the stock, I suggest you look at Medicure’s fundamentals in order to build a holistic investment thesis.
1. 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.
2. Historical Track Record: What has MPH’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.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Medicure? 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 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.
