Pieris Pharmaceuticals Inc (NASDAQ:PIRS), a biotechnology company based in United States, saw a significant share price rise of over 20% in the past couple of months on the NasdaqCM. Less covered, small-stocks like PIRS sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could PIRS still be trading at a low price relative to its actual value? Let’s examine PIRS’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. See our latest analysis for PIRS
Is PIRS still cheap?
PIRS is currently overpriced based on my relative valuation model. In this instance, I’ve used price-to-book ratio (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 PIRS’s ratio of 27.6x is above its peer average of 4.4x, which suggests the stock is overvalued compared to the biotechnology industry. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that PIRS’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will PIRS generate?
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. 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 PIRS future expectations. Though in the case of PIRS, 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? If you believe PIRS is currently trading above its peers, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to reduce your total portfolio risk. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on PIRS for a while, now may not be the best time to enter into the stock. Price climbed passed its industry peers, in addition to a risky future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Pieris Pharmaceuticals. You can find everything you need to know about PIRS in the latest infographic research report. If you are no longer interested in Pieris 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.