HTG Molecular Diagnostics Inc (NASDAQ:HTGM), a US$96.60m small-cap, is a healthcare company operating in an industry, which faces key trends such as rising demand fuelled by an aging population and the growing prevalence of chronic diseases. Healthcare tech is facing a structural shift in terms of technology-enabled devices, which can progress innovation clinically and cost-effectively. Growth will be driven from advancements from robotic surgery, 3D printing, implantable devices and treatment, aimed at improving outcomes and reducing costs. Healthcare analysts are forecasting for the entire industry, a somewhat weaker growth of 4.47% in the upcoming year , and an enormous growth of 64.81% over the next couple of years. This rate is larger than the growth rate of the US stock market as a whole. Is the healthcare tech industry an attractive sector-play right now? Today, I will analyse the industry outlook, and also determine whether HTG Molecular Diagnostics is a laggard or leader relative to its healthcare sector peers. See our latest analysis for HTG Molecular Diagnostics
What’s the catalyst for HTG Molecular Diagnostics’s sector growth?
Data analytics and other technology-enabled approaches are creating opportunities for innovations, however, stakeholders have been challenged to keep abreast of this structural shift while under pressure to cut costs. Over the past year, the industry saw growth in the twenties, beating the US market growth of 13.60%. HTG Molecular Diagnostics is neither a lagger nor a leader, and has been growing in-line with its industry peers at around 25.40% in the prior year. However, analysts are not expecting this trend to continue, with future growth expected to be 0.47% compared to the wider healthcare tech sector growth hovering of 4.47%, next year. This growth is a median of profitable companies of 19 Healthcare Services companies in US including Inovalon Holdings, Cotiviti Holdings and Cerner. As a future industry laggard in growth, HTG Molecular Diagnostics may be a cheaper stock relative to its peers.
Is HTG Molecular Diagnostics and the sector relatively cheap?
The healthcare tech industry is trading at a PE ratio of 46.76x, higher than the rest of the US stock market PE of 18.57x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry did return a higher 15.12% compared to the market’s 11.12%, which may be indicative of past tailwinds. Since HTG Molecular Diagnostics’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge HTG Molecular Diagnostics’s value is to assume the stock should be relatively in-line with its industry.
HTG Molecular Diagnostics’s industry-beating future is a positive for investors. If HTG Molecular Diagnostics has been on your watchlist for a while, now may be the time to enter into the stock, if you like its growth prospects and are not highly concentrated in the healthcare tech industry. However, before you make a decision on the stock, I suggest you look at HTG Molecular Diagnostics’s fundamentals in order to build a holistic investment thesis.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Historical Track Record: What has HTGM’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of HTG Molecular Diagnostics? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!