Is Proteon Therapeutics Inc (NASDAQ:PRTO) A Strong Healthcare Bet?
Proteon Therapeutics Inc (NASDAQ:PRTO), a US$39.0m small-cap, operates in the healthcare industry, which continues to be affected by the sustained economic uncertainty and structural trends, such as an aging population, impacting the sector globally. Healthcare analysts are forecasting for the entire industry, a strong double-digit growth of 11.9% in the upcoming year , and an enormous growth of 58.2% over the next couple of years. This rate is larger than the growth rate of the US stock market as a whole. Below, I will examine the sector growth prospects, and also determine whether Proteon Therapeutics is a laggard or leader relative to its healthcare sector peers.
View our latest analysis for Proteon Therapeutics
What’s the catalyst for Proteon Therapeutics’s sector growth?
Data analytics is creating opportunities for innovations, however, stakeholders are challenged with the pressure of reducing costs. In the previous year, the industry saw growth in the thirties, beating the US market growth of 15.5%. Proteon Therapeutics lags the pack with its negative growth rate of -35.9% over the past year, which indicates the company has been growing at a slower pace than its biotech peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of 31.2% in the upcoming year. This future growth may make Proteon Therapeutics a more expensive stock relative to its peers.
Is Proteon Therapeutics and the sector relatively cheap?
Biotech companies are typically trading at a PE of 26.44x, above the broader US stock market PE of 19.88x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry did return a higher 22.1% compared to the market’s 10.6%, which may be indicative of past tailwinds. Since Proteon Therapeutics’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Proteon Therapeutics’s value is to assume the stock should be relatively in-line with its industry.
Next Steps:
Proteon Therapeutics’s industry-beating future is a positive for investors. If Proteon Therapeutics has been on your watchlist for a while, now may be the time to enter into the stock, if you like its growth prospects and are not highly concentrated in the biotech industry. However, before you make a decision on the stock, I suggest you look at Proteon Therapeutics’s fundamentals in order to build a holistic investment thesis.
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.
Historical Track Record: What has PRTO’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.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Proteon Therapeutics? 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
