Chimerix Inc (NASDAQ:CMRX), a biotechnology company based in United States, saw a decent share price growth in the teens level on the NasdaqGM over the last few months. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s examine CMRX’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. See our latest analysis for CMRX
What is CMRX worth?
Great news for investors – CMRX is still trading at a fairly cheap price. In this instance, I’ve used price-to-book ratio (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 CMRX’s ratio of 0.9x is below its peer average of 3.7x, which suggests the stock is undervalued compared to the biotechnology industry. Although, there may be another chance to buy again in the future. This is because CMRX’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, CMRX’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can we expect growth from CMRX?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. 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 CMRX, at least in the near future.
What this means for you:
Are you a shareholder? Although CMRX is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to CMRX, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on CMRX for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Chimerix. You can find everything you need to know about CMRX in the latest infographic research report. If you are no longer interested in Chimerix, 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.