Medidata Solutions Inc (NASDAQ:MDSO), which is in the healthcare services business, and is based in United States, received a lot of attention from a substantial price movement on the NasdaqGS over the last few months, increasing to $88.28 at one point, and dropping to the lows of $65.78. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Medidata Solutions’s current trading price of $65.78 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Medidata Solutions’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What’s the opportunity in Medidata Solutions?According to my valuation model, the stock is currently overvalued by about 36.91%, trading at US$65.78 compared to my intrinsic value of $48.05. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Since Medidata Solutions’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Medidata Solutions 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. With profit expected to grow by 61% over the next couple of years, the future seems bright for Medidata Solutions. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in MDSO’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe MDSO should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. 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 tabs on MDSO for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for MDSO, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Medidata Solutions. You can find everything you need to know about Medidata Solutions in the latest infographic research report. If you are no longer interested in Medidata Solutions, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past 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. For errors that warrant correction please contact the editor at email@example.com.