NanoString Technologies Inc (NASDAQ:NSTG), a life sciences tools and services company based in United States, received a lot of attention from a substantial price movement on the NasdaqGM in the over the last few months, increasing to $16.57 at one point, and dropping to the lows of $9.18. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether NSTG’s current trading price of $9.72 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at NSTG’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for NSTG
Is NSTG still cheap?
According to my relative valuation model, NSTG seems to be currently fairly priced. I’ve used the price-to-book ratio in this instance because there’s not enough visibility to forecast its cash flows, and its earnings doesn’t seem to reflect its true value. The stock’s ratio of 4.7x is currently trading slightly above its industry peers’ ratio of 4.7x, which means if you buy NSTG today, you’d be paying a relatively reasonable price for it. And if you believe NSTG should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since NSTG’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much NSTG moves relative to the rest of the market.
What kind of growth will NSTG generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of NSTG, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Currently, NSTG appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on NSTG, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on NSTG for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on NSTG should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on NanoString Technologies. You can find everything you need to know about NSTG in the latest infographic research report. If you are no longer interested in NanoString Technologies, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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.