ENDRA Life Sciences Inc (NASDAQ:NDRA), a USD$9.18M small-cap, operates in the healthcare 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 positive double-digit growth of 21.23% in the upcoming year , and an enormous growth of 68.64% over the next couple of years. This rate is larger than the growth rate of the US stock market as a whole. Today, I will analyse the industry outlook, as well as evaluate whether NDRA is lagging or leading in the industry. View our latest analysis for ENDRA Life Sciences
What’s the catalyst for NDRA’s sector growth?
Personalized and data-driven equipment underpins the future advancement and structural shift in the healthcare equipment industry. In the past year, the industry delivered growth in the teens, beating the US market growth of 10.30%. NDRA 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 NDRA may be trading cheaper than its peers.
Is NDRA and the sector relatively cheap?
Healthcare companies are typically trading at a PE of 42x, above the broader US stock market PE of 22x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry returned a similar 11.31% on equities compared to the market’s 10.06%. Since NDRA’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge NDRA’s value is to assume the stock should be relatively in-line with its industry.
What this means for you:
Are you a shareholder? NDRA has been a healthcare equipment industry laggard in the past year. If your initial investment thesis is around the growth prospects of NDRA, there are other healthcare equipment companies that have delivered higher growth, and perhaps trading at a discount to the industry average. Consider how NDRA fits into your wider portfolio and the opportunity cost of holding onto the stock.
Are you a potential investor? If NDRA has been on your watchlist for a while, now may be a good time to dig deeper into the stock. Although its growth has delivered lower growth relative to its healthcare equipment peers in the near term, the market may be pessimistic on the stock, leading to a potential undervaluation. Before you make a decision on the stock, I suggest you look at NDRA’s future cash flows in order to assess whether the stock is trading at a reasonable price.
For a deeper dive into ENDRA Life Sciences’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other healthcare stocks instead? Use our free playform to see my list of over 1000 other healthcare companies trading on the market.
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.