Audentes Therapeutics Inc (NASDAQ:BOLD), a USD$703.49M 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. The demand for new drug development to meet new or persistent chronic illnesses, as well as the ongoing need for biotech drugs as Baby Boomers continue to age, are growth drivers for the optimistic outlook for the biotech industry in the long run. Healthcare analysts are forecasting for the entire industry, negative growth in the upcoming year , and a whopping growth of 44.94% over the next couple of years. This rate is larger than the growth rate of the US stock market as a whole. Is now the right time to pick up some shares in biotech companies? In this article, I’ll take you through the sector growth expectations, as well as evaluate whether BOLD is lagging or leading its competitors in the industry. Check out our latest analysis for Audentes Therapeutics
What’s the catalyst for BOLD’s sector growth?
Data analytics and other technology-enabled approaches are creating opportunities for innovations, however, stakeholders have been challenged to keep abreast of this structural shift while under pressure to cut costs. In the previous year, the industry saw growth of 8.45%, though still underperforming the wider US stock market. BOLD leads the pack with its impressive earnings growth of 83.73% over the past year. However, analysts are expecting its future earnings growth to be more in-line with the industry average, hovering at -1.25% over the next couple of years.
Is BOLD and the sector relatively cheap?
Biotech companies are typically trading at a PE of 27x, above the broader US stock market PE of 22x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry did return a higher 16.08% compared to the market’s 10.06%, which may be indicative of past tailwinds. Since BOLD’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge BOLD’s value is to assume the stock should be relatively in-line with its industry.
What this means for you:
Are you a shareholder? BOLD’s future growth prospect shows that it is able to keep up with its peers. If you’re bullish on the stock and well-diversified by industry, you may decide to hold onto BOLD as part of your portfolio. However, if you’re relatively concentrated in healthcare, you may want to value BOLD based on its cash flows to determine if it is overpriced based on its current growth outlook.
Are you a potential investor? If BOLD 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 healthcare industry. However, before you make a decision on the stock, I suggest you look at BOLD’s future cash flows in order to assess whether the stock is trading at a reasonable price, as well as other important fundamentals such as the company’s financial health in order to build a holistic investment thesis.
For a deeper dive into Audentes Therapeutics’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other healthcare stocks instead? Use our free playform to see my list of over 1000 other healthcare companies trading on the market.