Craneware plc (LON:CRW), a US$569.24m small-cap, is a healthcare company operating in an industry, which faces key trends such as rising demand fuelled by an aging population and the growing prevalence of chronic diseases. Healthcare tech is facing a structural shift in terms of technology-enabled devices, which can progress innovation clinically and cost-effectively. Growth will be driven from advancements from robotic surgery, 3D printing, implantable devices and treatment, aimed at improving outcomes and reducing costs. Healthcare analysts are forecasting for the entire industry, a positive double-digit growth of 17.93% in the upcoming year , and a massive growth of 64.69% over the next couple of years. This rate is larger than the growth rate of the UK stock market as a whole. Is now the right time to pick up some shares in healthcare tech companies? Below, I will examine the sector growth prospects, as well as evaluate whether Craneware is lagging or leading its competitors in the industry. See our latest analysis for Craneware
What’s the catalyst for Craneware’s sector growth?
New R&D methods and big data analytics 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 past year, the industry delivered growth of 3.40%, though still underperforming the wider UK stock market. Craneware leads the pack with its impressive earnings growth of 25.92% over the past year. However, analysts are not expecting this industry-beating trend to continue, with future growth expected to be 0.38% compared to the wider healthcare tech sector growth hovering in the teens next year. Since the Healthcare Services sector in GB is relatively small, I’ve included similar companies in the wider region in order to get a better idea of the growth, which is a median of profitable companies of companies such as EMIS Group, and . As a future industry laggard in growth, Craneware may be a cheaper stock relative to its peers.
Is Craneware and the sector relatively cheap?
The healthcare tech sector’s PE is currently hovering around 34.9x, above the broader UK stock market PE of 17.08x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry returned a similar 14.43% on equities compared to the market’s 12.47%. On the stock-level, Craneware is trading at a higher PE ratio of 57.58x, making it more expensive than the average healthcare tech stock. In terms of returns, Craneware generated 23.05% in the past year, which is 8.62% over the healthcare tech sector.
Craneware is a healthcare tech industry laggard in terms of its future growth outlook. In addition to this, the stock is trading at a PE above its peers, meaning it is more expensive on a relative earnings basis.If Craneware has been on your watchlist for a while, now may not be the best time to enter into the stock. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the healthcare sector. However, before you make a decision on the stock, I suggest you look at Craneware’s fundamentals in order to build a holistic investment thesis.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Historical Track Record: What has CRW’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Craneware? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!