Cesca Therapeutics Inc (NASDAQ:KOOL), a $32.29M small-cap, is a healthcare company operating in an industry, which has experienced tailwinds from issues such as higher demand driven by an aging population and the increasing prevalence of diseases and comorbidities. Moreover, healthcare equipment providers are faced with particularly difficult and interdependent challenges. Therefore, care delivery approaches that are holistic and technology-enabled are more likely to result in positive outcomes in the long run. Healthcare analysts are forecasting for the entire industry, a strong double-digit growth of 14.93% in the upcoming year , and an enormous growth of 45.84% over the next couple of years. Not surprisingly, this rate is more than double the growth rate of the US stock market as a whole. An interesting question to explore is whether we can we benefit from entering into the healthcare sector right now. In this article, I’ll take you through the sector growth expectations, and also determine whether Cesca Therapeutics is a laggard or leader relative to its healthcare sector peers. Check out our latest analysis for Cesca Therapeutics
What’s the catalyst for Cesca Therapeutics’s sector growth?
Personalized and data-driven equipment underpins the future advancement and structural shift in the healthcare equipment industry. In the previous year, the industry saw growth in the teens, beating the US market growth of 10.58%. Cesca Therapeutics lags the pack with its sustained negative earnings over the past couple of years. The company’s outlook seems uncertain, with a lack of analyst coverage, which doesn’t boost our confidence in the stock. This lack of growth and transparency means Cesca Therapeutics may be trading cheaper than its peers.
Is Cesca Therapeutics and the sector relatively cheap?
The healthcare sector’s PE is currently hovering around 34.6x, above the broader US stock market PE of 20.1x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry returned a similar 12.14% on equities compared to the market’s 10.47%. Since Cesca Therapeutics’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Cesca Therapeutics’s value is to assume the stock should be relatively in-line with its industry.
Next Steps:Cesca Therapeutics recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. If the stock has been on your watchlist for a while, now may be the time to buy, if you like its ability to deliver growth and are not highly concentrated in the healthcare industry. However, before you make a decision on the stock, I suggest you look at Cesca Therapeutics’s fundamentals in order to build a holistic investment thesis.
- 1. 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.
- 2. Historical Track Record: What has KOOL’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.
- 3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Cesca Therapeutics? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!