CTI BioPharma Corp (NASDAQ:CTIC), a biotechnology company based in United States, received a lot of attention from a substantial price movement on the NasdaqCM in the over the last few months, increasing to $3.42 at one point, and dropping to the lows of $2.76. 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 CTIC’s current trading price of $2.76 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 CTIC’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for CTI BioPharma
What’s the opportunity in CTIC?
The stock seems fairly valued at the moment according to my relative valuation model. 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 3.6x is currently trading slightly below its industry peers’ ratio of 3.7x, which means if you buy CTIC today, you’d be paying a relatively fair price for it. And if you believe CTIC should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, it seems like CTIC’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 CTIC’s stock is less volatile than the wider market given its low beta.
Can we expect growth from CTIC?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 CTIC future expectations. CTIC’s earnings over the next few years are expected to increase by 43.01%, 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? CTIC’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 financial strength of the company. Have these factors changed since the last time you looked at CTIC? 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 an eye on CTIC, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for CTIC, 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 CTI BioPharma. You can find everything you need to know about CTIC in the latest infographic research report. If you are no longer interested in CTI BioPharma, 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.