Should You Invest In The Healthcare Stock MicroPort Scientific Corporation (HKG:853)?
MicroPort Scientific Corporation (HKG:853), a US$11.24b small-cap, operates in the healthcare industry, which continues to be affected by the sustained economic uncertainty and structural trends, such as an aging population, impacting the sector globally. Healthcare analysts are forecasting for the entire industry, an extremely robust growth of 30.01% in the upcoming year , and a massive triple-digit earnings growth over the next couple of years. This rate is larger than the growth rate of the Hong Kong stock market as a whole. Today, I’ll take you through the sector growth expectations, as well as evaluate whether MicroPort Scientific is lagging or leading in the industry.
Check out our latest analysis for MicroPort Scientific
What’s the catalyst for MicroPort Scientific’s sector growth?
Integration with technology for data-driven equipment, has been a structural shift for the equipment providers. Over the past year, the industry saw growth in the twenties, beating the Hong Kong market growth of 16.79%. MicroPort Scientific leads the pack with its impressive earnings growth of 33.11% over the past year. Furthermore, analysts are expecting this trend of above-industry growth to continue, with MicroPort Scientific poised to deliver a 69.42% growth over the next couple of years compared to the industry’s 30.01%. This growth may make MicroPort Scientific a more expensive stock relative to its peers.
Is MicroPort Scientific and the sector relatively cheap?
The healthcare sector’s PE is currently hovering around 23.48x, higher than the rest of the Hong Kong stock market PE of 11.98x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry returned a similar 8.16% on equities compared to the market’s 9.71%. On the stock-level, MicroPort Scientific is trading at a higher PE ratio of 74.62x, making it more expensive than the average healthcare equipment stock. In terms of returns, MicroPort Scientific generated 3.86% in the past year, which is 4.30% below the healthcare equipment sector.
Next Steps:
MicroPort Scientific’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this higher growth prospect is also reflected in the company’s price, suggested by its higher PE ratio relative to its peers. If MicroPort Scientific has been on your watchlist for a while, now may not be the best time to enter into the stock since it is trading at a higher valuation compared to other healthcare equipment companies. However, before you make a decision on the stock, I suggest you look at MicroPort Scientific’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 853’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 MicroPort Scientific? 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
