Not Many Are Piling Into LabGenomics Co., Ltd. (KOSDAQ:084650) Stock Yet As It Plummets 26%

Unfortunately for some shareholders, the LabGenomics Co., Ltd. (KOSDAQ:084650) share price has dived 26% in the last thirty days, prolonging recent pain. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 26% share price drop.

Since its price has dipped substantially, LabGenomics' price-to-sales (or "P/S") ratio of 2.4x might make it look like a strong buy right now compared to the wider Biotechs industry in Korea, where around half of the companies have P/S ratios above 8.8x and even P/S above 45x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly reduced P/S.

View our latest analysis for LabGenomics

What Does LabGenomics' P/S Mean For Shareholders?

With revenue growth that's inferior to most other companies of late, LabGenomics has been relatively sluggish. Perhaps the market is expecting the current trend of poor revenue growth to continue, which has kept the P/S suppressed. If you still like the company, you'd be hoping revenue doesn't get any worse and that you could 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 LabGenomics will help you uncover what's on the horizon.

Is There Any Revenue Growth Forecasted For LabGenomics?

The only time you'd be truly comfortable seeing a P/S as depressed as LabGenomics' is when the company's growth is on track to lag the industry decidedly.

If we review the last year of revenue growth, the company posted a terrific increase of 17%. However, this wasn't enough as the latest three year period has seen the company endure a nasty 42% drop in revenue in aggregate. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

Shifting to the future, estimates from the sole analyst covering the company suggest revenue should grow by 51% over the next year. That's shaping up to be materially higher than the 37% growth forecast for the broader industry.

In light of this, it's peculiar that LabGenomics' P/S sits below the majority of other companies. It looks like most investors are not convinced at all that the company can achieve future growth expectations.

The Bottom Line On LabGenomics' P/S

Shares in LabGenomics have plummeted and its P/S has followed suit. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

A look at LabGenomics' revenues reveals that, despite glowing future growth forecasts, its P/S is much lower than we'd expect. There could be some major risk factors that are placing downward pressure on the P/S ratio. At least price risks look to be very low, but investors seem to think future revenues could see a lot of volatility.

Having said that, be aware LabGenomics is showing 2 warning signs in our investment analysis, you should know about.

If these risks are making you reconsider your opinion on LabGenomics, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.