Novelion Therapeutics Inc (NASDAQ:NVLN), a US$76.13M small-cap, is a healthcare company operating in an 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 9.66% in the upcoming year , and an enormous growth of 45.48% over the next couple of years. This rate is larger than the growth rate of the US stock market as a whole. Below, I will examine the sector growth prospects, as well as evaluate whether Novelion Therapeutics is lagging or leading in the industry. See our latest analysis for Novelion Therapeutics
What’s the catalyst for Novelion Therapeutics’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. Over the past year, the industry saw growth in the twenties, beating the US market growth of 13.66%. Novelion Therapeutics lags the pack with its negative growth rate of -47.74% 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 11.82% in the upcoming year.
Is Novelion Therapeutics and the sector relatively cheap?
The biotech sector’s PE is currently hovering around 26.52x, higher than the rest of the US stock market PE of 18.57x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry did return a higher 18.07% compared to the market’s 11.19%, which may be indicative of past tailwinds. Since Novelion Therapeutics’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Novelion Therapeutics’s value is to assume the stock should be relatively in-line with its industry.
Novelion Therapeutics’s industry-beating future is a positive for investors. If Novelion Therapeutics 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 Novelion Therapeutics’s fundamentals in order to build a holistic investment thesis.
- 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.
- Historical Track Record: What has NVLN’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.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Novelion Therapeutics? 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.