OliX Pharmaceuticals, Inc (KOSDAQ:226950) Looks Just Right With A 34% Price Jump

Despite an already strong run, OliX Pharmaceuticals, Inc (KOSDAQ:226950) shares have been powering on, with a gain of 34% in the last thirty days. Looking back a bit further, it's encouraging to see the stock is up 85% in the last year.

Since its price has surged higher, OliX Pharmaceuticals may be sending very bearish signals at the moment with a price-to-sales (or "P/S") ratio of 26.4x, since almost half of all companies in the Biotechs industry in Korea have P/S ratios under 10.3x and even P/S lower than 2x are not unusual. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so lofty.

See our latest analysis for OliX Pharmaceuticals

How OliX Pharmaceuticals Has Been Performing

Recent times have been quite advantageous for OliX Pharmaceuticals as its revenue has been rising very briskly. It seems that many are expecting the strong revenue performance to beat most other companies over the coming period, which has increased investors’ willingness to pay up for the stock. If not, then existing shareholders might be a little nervous about the viability of the share price.

We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on OliX Pharmaceuticals' earnings, revenue and cash flow.

Do Revenue Forecasts Match The High P/S Ratio?

The only time you'd be truly comfortable seeing a P/S as steep as OliX Pharmaceuticals' is when the company's growth is on track to outshine the industry decidedly.

Retrospectively, the last year delivered an exceptional 123% gain to the company's top line. The latest three year period has also seen an excellent 299% overall rise in revenue, aided by its short-term performance. Therefore, it's fair to say the revenue growth recently has been superb for the company.

When compared to the industry's one-year growth forecast of 46%, the most recent medium-term revenue trajectory is noticeably more alluring

With this in consideration, it's not hard to understand why OliX Pharmaceuticals' P/S is high relative to its industry peers. Presumably shareholders aren't keen to offload something they believe will continue to outmanoeuvre the wider industry.

The Final Word

OliX Pharmaceuticals' P/S has grown nicely over the last month thanks to a handy boost in the share price. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

It's no surprise that OliX Pharmaceuticals can support its high P/S given the strong revenue growth its experienced over the last three-year is superior to the current industry outlook. In the eyes of shareholders, the probability of a continued growth trajectory is great enough to prevent the P/S from pulling back. If recent medium-term revenue trends continue, it's hard to see the share price falling strongly in the near future under these circumstances.

Before you take the next step, you should know about the 4 warning signs for OliX Pharmaceuticals (3 are concerning!) that we have uncovered.

If these risks are making you reconsider your opinion on OliX Pharmaceuticals, 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.