Is There Now An Opportunity In IMV Corporation (TSE:7760)?

While IMV Corporation (TSE:7760) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the TSE over the last few months. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. 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 examine IMV’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

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What Is IMV Worth?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 6.3% below our intrinsic value, which means if you buy IMV today, you’d be paying a reasonable price for it. And if you believe the company’s true value is ¥1570.66, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because IMV’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.

Check out our latest analysis for IMV

Can we expect growth from IMV?

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. 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. Though in the case of IMV, it is expected to deliver a relatively unexciting earnings growth of 9.1%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in 7760’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on 7760, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing IMV at this point in time. In terms of investment risks, we've identified 1 warning sign with IMV, and understanding it should be part of your investment process.

If you are no longer interested in IMV, 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.