Catalyst Biosciences Inc (NASDAQ:CBIO): Is Healthcare Attractive Relative To NasdaqCM Peers?
Catalyst Biosciences Inc (NASDAQ:CBIO), a USD$42.93M small-cap, operates in the healthcare industry, which faces key trends such as rising demand fuelled by an aging population and the growing prevalence of chronic diseases. Healthcare analysts are forecasting for the entire industry, a relatively muted growth of 9.04% in the upcoming year , and a whopping growth of 49.33% over the next couple of years. Not surprisingly, this rate is more than double the growth rate of the US stock market as a whole. Today, I’ll take you through the sector growth expectations, as well as evaluate whether Catalyst Biosciences is lagging or leading in the industry. Check out our latest analysis for Catalyst Biosciences
What’s the catalyst for Catalyst Biosciences’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 in the teens, beating the US market growth of 10.78%. Catalyst Biosciences leads the pack with its impressive earnings growth of 60.20% over the past year. Furthermore, analysts are expecting this trend of above-industry growth to continue, with Catalyst Biosciences poised to deliver a 38.60% growth over the next couple of years.
Is Catalyst Biosciences and the sector relatively cheap?
The biotech sector’s PE is currently hovering around 29x, higher than the rest of the US stock market PE of 20x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry did return a higher 16.06% compared to the market’s 10.46%, which may be indicative of past tailwinds. Since Catalyst Biosciences’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Catalyst Biosciences’s value is to assume the stock should be relatively in-line with its industry.
What this means for you:
Are you a shareholder? Catalyst Biosciences’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. If you’re bullish on the stock and well-diversified by industry, you may decide to hold onto Catalyst Biosciences as part of your portfolio. However, if you’re relatively concentrated in biotech, you may want to value Catalyst Biosciences based on its cash flows to determine if it is overpriced based on its current growth outlook.
Are you a potential investor? If Catalyst Biosciences 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. Before you make a decision on the stock, take a look at Catalyst Biosciences’s cash flows and assess whether the stock is trading at a fair price.
For a deeper dive into Catalyst Biosciences’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other healthcare stocks instead? Use our free playform to see my list of over 1000 other healthcare companies trading on the market.
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.
