Fibrocell Science Inc (NASDAQ:FCSC), a $18.39M small-cap, is a healthcare company operating in an industry, which faces demand for new drug development to meet new or persistent chronic illnesses, and ongoing need for biotech drugs as Baby Boomers continue to age. Healthcare analysts are forecasting for the entire industry, a relatively muted growth of 1.58% 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. Below, I will examine the sector growth prospects, as well as evaluate whether Fibrocell Science is lagging or leading in the industry. Check out our latest analysis for Fibrocell Science
What’s the catalyst for Fibrocell Science’s sector growth?
New R&D methods and big data analytics 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 10.58%. Fibrocell Science lags the pack with its lower growth rate of 9.37% over the past year, which indicates the company will be growing at a slower pace than its biotech peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of 41.24% in the upcoming year.
Is Fibrocell Science and the sector relatively cheap?
The biotech sector’s PE is currently hovering around 27x, above the broader US stock market PE of 20.1x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry did return a higher 16.12% compared to the market’s 10.47%, which may be indicative of past tailwinds. Since Fibrocell Science’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Fibrocell Science’s value is to assume the stock should be relatively in-line with its industry.
Fibrocell Science’s industry-beating future is a positive for investors. If Fibrocell Science 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. However, before you make a decision on the stock, I suggest you look at Fibrocell Science’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 FCSC’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 Fibrocell Science? 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.