Cleveland BioLabs Inc (NASDAQ:CBLI), a US$39.37M small-cap, is a healthcare company operating in an industry, which has experienced tailwinds from issues such as higher demand driven by an aging population and the increasing prevalence of diseases and comorbidities. Healthcare analysts are forecasting for the entire industry, a somewhat weaker growth of 1.58% in the upcoming year , and a massive 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 Cleveland BioLabs is a laggard or leader relative to its healthcare sector peers. View our latest analysis for Cleveland BioLabs
What’s the catalyst for Cleveland BioLabs’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. Over the past year, the industry saw growth in the teens, beating the US market growth of 9.72%. Cleveland BioLabs 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 Cleveland BioLabs may be trading cheaper than its peers.
Is Cleveland BioLabs and the sector relatively cheap?
The biotech sector’s PE is currently hovering around 26.96x, higher than the rest of the US stock market PE of 18.89x. This means the industry, on average, is relatively overvalued compared to the wider 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 Cleveland BioLabs’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Cleveland BioLabs’s value is to assume the stock should be relatively in-line with its industry.
Cleveland BioLabs has been a biotech industry laggard in the past year. If Cleveland BioLabs has been on your watchlist for a while, now may be a good time to dig deeper into the stock. Although it delivered lower growth relative to its healthcare peers in the near term, the market may be pessimistic on the stock, leading to a potential undervaluation. However, before you make a decision on the stock, I suggest you look at Cleveland BioLabs’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 CBLI’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 Cleveland BioLabs? 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.