Is It Time To Buy Dynavax Technologies Corporation (DVAX)?
Dynavax Technologies Corporation (NASDAQ:DVAX), a pharmaceuticals, biotechnology and life sciences company based in United States, See our latest analysis for DVAX
What's the opportunity in DVAX?
The stock seems fairly valued at the moment according to my relative valuation model. 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 8.2x is currently trading slightly above its industry peers’ ratio of 7.4x, which means if you buy DVAX today, you’d be paying a relatively reasonable price for it. And if you believe DVAX should be trading in this range, then there isn’t really any room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because DVAX’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, DVAX’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of DVAX look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio.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 DVAX, it is expected to deliver a negative earnings growth of -13.99%, 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, DVAX 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 reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on DVAX, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on DVAX for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, 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 gel your views on DVAX 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 Dynavax Technologies. You can find everything you need to know about DVAX in the latest infographic research report. If you are no longer interested in Dynavax 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.
