Akari Therapeutics Plc (NASDAQ:AKTX), a pharmaceuticals company based in United States, saw significant share price volatility over the past couple of months on the NasdaqCM, rising to the highs of $2.39 and falling to the lows of $1.77. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Akari Therapeutics’s current trading price of $1.92 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Akari Therapeutics’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Akari Therapeutics
What’s the opportunity in Akari Therapeutics?
According to my relative valuation model, the stock seems to be currently fairly priced. In this instance, I’ve used the price-to-book (PB) ratio given that there is not enough information to reliably forecast the stock’s cash flows, and its earnings doesn’t seem to reflect its true value. I find that Akari Therapeutics’s ratio of 1.47x is trading slightly below its industry peers’ ratio of 2.65x, which means if you buy Akari Therapeutics today, you’d be paying a relatively reasonable price for it. And if you believe that Akari Therapeutics should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Furthermore, it seems like Akari Therapeutics’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Akari Therapeutics look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Akari Therapeutics, at least in the near future.
What this means for you:
Are you a shareholder? Currently, AKTX appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on AKTX, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on AKTX for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on AKTX should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Akari Therapeutics. You can find everything you need to know about Akari Therapeutics in the latest infographic research report. If you are no longer interested in Akari Therapeutics, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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.