Devyser Diagnostics AB (publ) (STO:DVYSR) Stock Rockets 28% But Many Are Still Ignoring The Company

Devyser Diagnostics AB (publ) (STO:DVYSR) shares have had a really impressive month, gaining 28% after a shaky period beforehand. Notwithstanding the latest gain, the annual share price return of 5.2% isn't as impressive.

Although its price has surged higher, you could still be forgiven for feeling indifferent about Devyser Diagnostics' P/S ratio of 7.7x, since the median price-to-sales (or "P/S") ratio for the Biotechs industry in Sweden is also close to 7.9x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

See our latest analysis for Devyser Diagnostics

How Devyser Diagnostics Has Been Performing

Devyser Diagnostics could be doing better as it's been growing revenue less than most other companies lately. It might be that many expect the uninspiring revenue performance to strengthen positively, which has kept the P/S ratio from falling. You'd really hope so, otherwise you're paying a relatively elevated price for a company with this sort of growth profile.

Want the full picture on analyst estimates for the company? Then our free report on Devyser Diagnostics will help you uncover what's on the horizon.

How Is Devyser Diagnostics' Revenue Growth Trending?

The only time you'd be comfortable seeing a P/S like Devyser Diagnostics' is when the company's growth is tracking the industry closely.

Taking a look back first, we see that the company grew revenue by an impressive 35% last year. The latest three year period has also seen an excellent 141% overall rise in revenue, aided by its short-term performance. So we can start by confirming that the company has done a great job of growing revenue over that time.

Shifting to the future, estimates from the three analysts covering the company suggest revenue should grow by 35% each year over the next three years. That's shaping up to be materially higher than the 26% per year growth forecast for the broader industry.

In light of this, it's curious that Devyser Diagnostics' P/S sits in line with the majority of other companies. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.

What Does Devyser Diagnostics' P/S Mean For Investors?

Its shares have lifted substantially and now Devyser Diagnostics' P/S is back within range of the industry median. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

Despite enticing revenue growth figures that outpace the industry, Devyser Diagnostics' P/S isn't quite what we'd expect. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.

A lot of potential risks can sit within a company's balance sheet. You can assess many of the main risks through our free balance sheet analysis for Devyser Diagnostics with six simple checks.

If you're unsure about the strength of Devyser Diagnostics' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.