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Healthcare Industry Trends And Its Impact On Premaitha Health PLC (LON:NIPT)

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Amar Chadha
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Premaitha Health PLC (AIM:NIPT), a UK£16.38M 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 somewhat weaker growth of 6.23% in the upcoming year , and a strong near-term growth of 15.09% over the next couple of years. However, this rate came in below the growth rate of the UK stock market as a whole. Below, I will examine the sector growth prospects, and also determine whether Premaitha Health is a laggard or leader relative to its healthcare sector peers. View our latest analysis for Premaitha Health

What’s the catalyst for Premaitha Health’s sector growth?

AIM:NIPT Past Future Earnings Feb 14th 18
AIM:NIPT Past Future Earnings Feb 14th 18

Integration with technology for more personalized and data-driven equipment, underpinning healthcare ‘internet of things’ has been a structural shift for the healthcare equipment providers. Over the past year, the industry saw growth of 2.15%, though still underperforming the wider UK stock market. Premaitha Health lags the pack with its sustained negative earnings over the past couple of years. The company’s outlook seems uncertain, with a lack of analyst coverage, which doesn’t boost our confidence in the stock. This lack of growth and transparency means Premaitha Health may be trading cheaper than its peers.

Is Premaitha Health and the sector relatively cheap?

AIM:NIPT PE PEG Gauge Feb 14th 18
AIM:NIPT PE PEG Gauge Feb 14th 18

The healthcare industry is trading at a PE ratio of 31.97x, above the broader UK stock market PE of 17.36x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry returned a similar 12.19% on equities compared to the market’s 12.78%. Since Premaitha Health’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Premaitha Health’s value is to assume the stock should be relatively in-line with its industry.

Next Steps:

Premaitha Health recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. If the stock has been on your watchlist for a while, now may be the time to buy, if you like its ability to deliver growth and are not highly concentrated in the healthcare industry. However, before you make a decision on the stock, I suggest you look at Premaitha Health’s fundamentals in order to build a holistic investment thesis.

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.