Aurinia Pharmaceuticals Inc (NASDAQ:AUPH), a biotechnology company based in Canada, saw a double-digit share price rise of over 10% in the past couple of months on the NasdaqGM. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on AUPH’s outlook and valuation to see if the opportunity still exists. View our latest analysis for Aurinia Pharmaceuticals
What is AUPH worth?
According to my relative valuation model, AUPH seems to be currently fairly priced. I’ve used the price-to-book ratio in this instance because there’s not enough visibility to forecast its cash flows, and its earnings doesn’t seem to reflect its true value. The stock’s ratio of 3.1x is currently trading slightly below its industry peers’ ratio of 4.4x, which means if you buy AUPH today, you’d be paying a relatively fair price for it. And if you believe AUPH should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since AUPH’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much AUPH moves relative to the rest of the market.
What kind of growth will AUPH generate?
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 AUPH future expectations. AUPH’s earnings over the next few years are expected to increase by 77.63%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? AUPH’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at AUPH? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on AUPH, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for AUPH, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Aurinia Pharmaceuticals. You can find everything you need to know about AUPH in the latest infographic research report. If you are no longer interested in Aurinia Pharmaceuticals, 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.