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Is KalVista Pharmaceuticals’s (NASDAQ:KALV) 147% Share Price Increase Well Justified?

Simply Wall St

Unfortunately, investing is risky – companies can and do go bankrupt. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the KalVista Pharmaceuticals, Inc. (NASDAQ:KALV) share price has soared 147% return in just a single year. In more good news, the share price has risen 11% in thirty days. Note that businesses generally develop over the long term, so it the returns over the last year might not reflect a long term trend.

See our latest analysis for KalVista Pharmaceuticals

KalVista Pharmaceuticals isn’t a profitable company, so it is unlikely we’ll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn’t make profits, we’d generally expect to see good revenue growth. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

KalVista Pharmaceuticals grew its revenue by 939% last year. That’s well above most other pre-profit companies. And the share price has responded, gaining 147% as we previously mentioned. It’s great to see strong revenue growth, but the question is whether it can be sustained. The strong share price rise indicates optimism, so there may be a better opportunity for buyers as the hype fades a bit.

The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.

NasdaqGM:KALV Income Statement, March 14th 2019

Balance sheet strength is crucual. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

KalVista Pharmaceuticals boasts a total shareholder return of 147% for the last year. The more recent returns haven’t been as impressive as the longer term returns, coming in at just 2.1%. Having said that, we doubt shareholders would be concerned. It seems the market is simply waiting on more information, because if the business delivers so will the share price (eventually). You might want to assess this data-rich visualization of its earnings, revenue and cash flow.

We will like KalVista Pharmaceuticals better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.