What’s Ahead For NewLink Genetics Corporation (NASDAQ:NLNK)?
NewLink Genetics Corporation (NASDAQ:NLNK), a US$87.8m small-cap, is a healthcare company operating in an industry, which faces demand for new drug development to meet new or persistent chronic illnesses, and ongoing need for biotech drugs as Baby Boomers continue to age. Healthcare analysts are forecasting for the entire industry, a positive double-digit growth of 11.9% in the upcoming year , and a whopping growth of 58.2% over the next couple of years. This rate is larger than the growth rate of the US stock market as a whole. Today, I will analyse the industry outlook, as well as evaluate whether NewLink Genetics is lagging or leading in the industry.
Check out our latest analysis for NewLink Genetics
What’s the catalyst for NewLink Genetics’s sector growth?
Data analytics is creating opportunities for innovations, however, stakeholders are challenged with the pressure of reducing costs. In the past year, the industry delivered growth in the thirties, beating the US market growth of 15.5%. NewLink Genetics lags the pack with its negative growth rate of -4.9% 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 NewLink Genetics a more expensive stock relative to its peers.
Is NewLink Genetics and the sector relatively cheap?
The biotech industry is trading at a PE ratio of 26.44x, higher than the rest of the US stock market PE of 19.87x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry did return a higher 22.1% compared to the market’s 10.6%, which may be indicative of past tailwinds. Since NewLink Genetics’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge NewLink Genetics’s value is to assume the stock should be relatively in-line with its industry.
Next Steps:
NewLink Genetics’s industry-beating future is a positive for investors. If NewLink Genetics 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 NewLink Genetics’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 NLNK’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 NewLink Genetics? 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.
