DelMar Pharmaceuticals Inc (NASDAQ:DMPI), a US$28.73M 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 fairly unexciting growth rate of 7.24% in the upcoming year , and a whopping growth of 39.93% 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, and also determine whether DelMar Pharmaceuticals is a laggard or leader relative to its healthcare sector peers. Check out our latest analysis for DelMar Pharmaceuticals
What’s the catalyst for DelMar Pharmaceuticals’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 previous year, the industry saw growth in the teens, beating the US market growth of 9.73%. DelMar Pharmaceuticals lags the pack with its sustained negative earnings over the past couple of years. The company’s outlook doesn’t seem to be much better given that analysts are forecasting continued unprofitability going forward.
Is DelMar Pharmaceuticals and the sector relatively cheap?
The biotech sector’s PE is currently hovering around 27.54x, higher than the rest of the US stock market PE of 18.88x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry did return a higher 16.06% compared to the market’s 10.49%, which may be indicative of past tailwinds. Since DelMar Pharmaceuticals’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge DelMar Pharmaceuticals’s value is to assume the stock should be relatively in-line with its industry.
DelMar Pharmaceuticals’s uncertain outlook is concerning for investors, with the prospect of negative earnings persisting into the future. If DelMar Pharmaceuticals has been on your watchlist for a while, now may not be the time to enter into the stock. However, before you make a decision on the stock, I suggest you look at DelMar Pharmaceuticals’s fundamentals in order to build a holistic investment thesis.
- 1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- 2. Historical Track Record: What has DMPI’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- 3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of DelMar Pharmaceuticals? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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.