Santhera Pharmaceuticals Holding AG (VTX:SANN) Stock Catapults 26% Though Its Price And Business Still Lag The Industry

Santhera Pharmaceuticals Holding AG (VTX:SANN) shares have had a really impressive month, gaining 26% after a shaky period beforehand. Unfortunately, despite the strong performance over the last month, the full year gain of 4.2% isn't as attractive.

Although its price has surged higher, Santhera Pharmaceuticals Holding may still look like a strong buying opportunity at present with its price-to-sales (or "P/S") ratio of 1.1x, considering almost half of all companies in the Biotechs industry in Switzerland have P/S ratios greater than 6.3x and even P/S higher than 12x aren't out of the ordinary. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly reduced P/S.

Check out our latest analysis for Santhera Pharmaceuticals Holding

What Does Santhera Pharmaceuticals Holding's Recent Performance Look Like?

Santhera Pharmaceuticals Holding certainly has been doing a good job lately as it's been growing revenue more than most other companies. Perhaps the market is expecting future revenue performance to dive, which has kept the P/S suppressed. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

Want the full picture on analyst estimates for the company? Then our free report on Santhera Pharmaceuticals Holding will help you uncover what's on the horizon.

Is There Any Revenue Growth Forecasted For Santhera Pharmaceuticals Holding?

There's an inherent assumption that a company should far underperform the industry for P/S ratios like Santhera Pharmaceuticals Holding's to be considered reasonable.

If we review the last year of revenue growth, we see the company's revenues grew exponentially. The latest three year period has also seen an incredible overall rise in revenue, aided by its incredible short-term performance. Accordingly, shareholders would have been over the moon with those medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 8.8% each year during the coming three years according to the dual analysts following the company. That's shaping up to be materially lower than the 73% per year growth forecast for the broader industry.

In light of this, it's understandable that Santhera Pharmaceuticals Holding's P/S sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

The Bottom Line On Santhera Pharmaceuticals Holding's P/S

Shares in Santhera Pharmaceuticals Holding have risen appreciably however, its P/S is still subdued. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

As expected, our analysis of Santhera Pharmaceuticals Holding's analyst forecasts confirms that the company's underwhelming revenue outlook is a major contributor to its low P/S. Shareholders' pessimism on the revenue prospects for the company seems to be the main contributor to the depressed P/S. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

You always need to take note of risks, for example - Santhera Pharmaceuticals Holding has 3 warning signs we think you should be aware of.

Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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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.