Investors might be losing patience for Calliditas Therapeutics' (STO:CALTX) increasing losses, as stock sheds 13% over the past week

By
Simply Wall St
Published
February 19, 2022
OM:CALTX
Source: Shutterstock

It's been a soft week for Calliditas Therapeutics AB (publ) (STO:CALTX) shares, which are down 13%. But that doesn't change the fact that the returns over the last three years have been very strong. In three years the stock price has launched 113% higher: a great result. To some, the recent share price pullback wouldn't be surprising after such a good run. The fundamental business performance will ultimately dictate whether the top is in, or if this is a stellar buying opportunity.

While this past week has detracted from the company's three-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

Check out our latest analysis for Calliditas Therapeutics

Given that Calliditas Therapeutics didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 3 years Calliditas Therapeutics saw its revenue grow at 14% per year. That's pretty nice growth. It's fair to say that the market has acknowledged the growth by pushing the share price up 29% per year. It's hard to value pre-profit businesses, but it seems like the market has become a lot more optimistic about this one! It would be worth thinking about when profits will flow, since that milestone will attract more attention.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
OM:CALTX Earnings and Revenue Growth February 19th 2022

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

Over the last year, Calliditas Therapeutics shareholders took a loss of 29%. In contrast the market gained about 8.9%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Fortunately the longer term story is brighter, with total returns averaging about 29% per year over three years. The recent sell-off could be an opportunity if the business remains sound, so it may be worth checking the fundamental data for signs of a long-term growth trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Calliditas Therapeutics you should know about.

Calliditas Therapeutics is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on SE exchanges.

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