Enanta Pharmaceuticals Inc (NASDAQ:ENTA), a biotechnology company based in United States, received a lot of attention from a substantial price increase on the NasdaqGS in the over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine ENTA’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. View our latest analysis for Enanta Pharmaceuticals
Is ENTA still cheap?
The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-book (PB) ratio given that there is not enough information to reliably forecast the stock’s cash flows, and its earnings doesn’t seem to reflect its true value. I find that ENTA’s ratio of 3.6x is trading slightly below its industry peers’ ratio of 4.4x, which means if you buy ENTA today, you’d be paying a relatively reasonable price for it. And if you believe that ENTA should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Furthermore, ENTA’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for ENTA to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
What kind of growth will ENTA generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at ENTA future expectations. With profit expected to grow by 56.07% over the next year, the near-term future seems bright for ENTA. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in ENTA’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at ENTA? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on ENTA, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for ENTA, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Enanta Pharmaceuticals. You can find everything you need to know about ENTA in the latest infographic research report. If you are no longer interested in Enanta Pharmaceuticals, 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.