Investors Appear Satisfied With Hansa Biopharma AB (publ)'s (STO:HNSA) Prospects As Shares Rocket 28%

Hansa Biopharma AB (publ) (STO:HNSA) shareholders have had their patience rewarded with a 28% share price jump in the last month. Looking further back, the 25% rise over the last twelve months isn't too bad notwithstanding the strength over the last 30 days.

Since its price has surged higher, Hansa Biopharma may be sending very bearish signals at the moment with a price-to-sales (or "P/S") ratio of 21.9x, since almost half of all companies in the Biotechs industry in Sweden have P/S ratios under 13.6x and even P/S lower than 6x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.

Check out our latest analysis for Hansa Biopharma

How Has Hansa Biopharma Performed Recently?

Recent times haven't been great for Hansa Biopharma as its revenue has been rising slower than most other companies. Perhaps the market is expecting future revenue performance to undergo a reversal of fortunes, which has elevated the P/S ratio. However, if this isn't the case, investors might get caught out paying too much for the stock.

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

How Is Hansa Biopharma's Revenue Growth Trending?

There's an inherent assumption that a company should far outperform the industry for P/S ratios like Hansa Biopharma's to be considered reasonable.

Taking a look back first, we see that the company managed to grow revenues by a handy 3.1% last year. The latest three year period has seen an incredible overall rise in revenue, even though the last 12 month performance was only fair. Accordingly, shareholders would have been over the moon with those medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 62% each year during the coming three years according to the four analysts following the company. That's shaping up to be materially higher than the 28% per year growth forecast for the broader industry.

With this information, we can see why Hansa Biopharma is trading at such a high P/S compared to the industry. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

What We Can Learn From Hansa Biopharma's P/S?

The strong share price surge has lead to Hansa Biopharma's P/S soaring as well. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

As we suspected, our examination of Hansa Biopharma's analyst forecasts revealed that its superior revenue outlook is contributing to its high P/S. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. Unless these conditions change, they will continue to provide strong support to the share price.

We don't want to rain on the parade too much, but we did also find 5 warning signs for Hansa Biopharma (1 is a bit concerning!) that you need to be mindful of.

Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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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.