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Tiziana Life Sciences PLC (LON:TILS): What Does It Mean For Your Portfolio?

For Tiziana Life Sciences PLC’s (AIM:TILS) shareholders, and also potential investors in the stock, understanding how the stock’s risk and return characteristics can impact your portfolio is important. The beta measures TILS’s exposure to the wider market risk, which reflects changes in economic and political factors. Different characteristics of a stock expose it to various levels of market risk, and the market as a whole represents a beta of one. A stock with a beta greater than one is considered more sensitive to market-wide shocks compared to a stock that trades below the value of one.

View our latest analysis for Tiziana Life Sciences

What does TILS’s beta value mean?

With a beta of 1.24, Tiziana Life Sciences is a stock that tends to experience more gains than the market during a growth phase and also a bigger reduction in value compared to the market during a broad downturn. According to this value of beta, TILS will help diversify your portfolio, if it currently comprises of low-beta stocks. This will be beneficial for portfolio returns, in particular, when current market sentiment is positive.

Does TILS’s size and industry impact the expected beta?

A market capitalisation of UK£105.19M puts TILS in the category of small-cap stocks, which tends to possess higher beta than larger companies. However, TILS operates in the biotechs industry, which has commonly demonstrated muted reactions to market-wide shocks. Therefore, investors can expect a high beta associated with the size of TILS, but a lower beta given the nature of the industry it operates in. This is an interesting conclusion, since its industry suggests TILS should be less volatile than it actually is. There may be a more fundamental driver which can explain this inconsistency, which we will examine below.

AIM:TILS Income Statement Apr 12th 18
AIM:TILS Income Statement Apr 12th 18

Can TILS’s asset-composition point to a higher beta?

An asset-heavy company tends to have a higher beta because the risk associated with running fixed assets during a downturn is highly expensive. I examine TILS’s ratio of fixed assets to total assets to see whether the company is highly exposed to the risk of this type of constraint. Considering fixed assets is virtually non-existent in TILS’s operations, it has low dependency on fixed costs to generate revenue. As a result, the company may be less volatile relative to broad market movements, compared to a company of similar size but higher proportion of fixed assets. This outcome contradicts TILS’s current beta value which indicates an above-average volatility.

What this means for you:

You may reap the gains of TILS’s returns during times of economic growth by holding the stock. Its low fixed cost also implies that it has the flexibility to adjust its cost to preserve margins during times of a downturn. I recommend analysing the stock in terms of your current portfolio composition before deciding to invest more into TILS. What I have not mentioned in my article here are important company-specific fundamentals such as Tiziana Life Sciences’s financial health and performance track record. I highly recommend you to complete your research by taking a look at the following:

  1. Financial Health: Is TILS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

  2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.


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.

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