Is Now The Time To Look At Buying Mach7 Technologies Limited (ASX:M7T)?

While Mach7 Technologies Limited (ASX:M7T) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the ASX 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? Let’s take a look at Mach7 Technologies’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Mach7 Technologies

What Is Mach7 Technologies Worth?

According to my valuation model, Mach7 Technologies seems to be fairly priced at around 5.87% above my intrinsic value, which means if you buy Mach7 Technologies today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth A$0.75, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Mach7 Technologies’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Mach7 Technologies 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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -15% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Mach7 Technologies. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? M7T seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on M7T for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on M7T should the price fluctuate below its true value.

Since timing is quite important when it comes to individual stock picking, it's worth taking a look at what those latest analysts forecasts are. Luckily, you can check out what analysts are forecasting by clicking here.

If you are no longer interested in Mach7 Technologies, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St 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. Simply Wall St has no position in any stocks mentioned.