At $0.4874, Is It Time To Buy VIVUS Inc (NASDAQ:VVUS)?

VIVUS Inc (NASDAQ:VVUS), a pharmaceuticals company based in United States, received a lot of attention from a substantial price increase on the NasdaqGS over the last few months. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today I will analyse the most recent data on VIVUS’s outlook and valuation to see if the opportunity still exists. See our latest analysis for VIVUS

What is VIVUS worth?

Great news for investors – VIVUS is still trading at a fairly cheap price. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that VIVUS’s ratio of 1.42x is below its peer average of 22.67x, which suggests the stock is undervalued compared to the Pharmaceuticals industry. What’s more interesting is that, VIVUS’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will VIVUS 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 the company's future expectations. However, with an extreme expected decline in the top-line in the upcoming year, short term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for VIVUS.

What this means for you:

Are you a shareholder? Although VVUS is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to VVUS, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on VVUS for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on VIVUS. You can find everything you need to know about VIVUS in the latest infographic research report. If you are no longer interested in VIVUS, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.