Is Now The Time To Look At Buying Surmodics, Inc. (NASDAQ:SRDX)?

Surmodics, Inc. (NASDAQ:SRDX), is not the largest company out there, but it received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. The company's trading levels have reached its high for the past year, following the recent bounce in the share price. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s take a look at Surmodics’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Surmodics

Is Surmodics Still Cheap?

Good news, investors! Surmodics is still a bargain right now. Our valuation model shows that the intrinsic value for the stock is $68.80, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Surmodics’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Surmodics generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Surmodics, at least in the near future.

What This Means For You

Are you a shareholder? Although SRDX is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. We recommend you think about whether you want to increase your portfolio exposure to SRDX, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on SRDX for a while, but hesitant on making the leap, we recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

So while earnings quality is important, it's equally important to consider the risks facing Surmodics at this point in time. For instance, we've identified 2 warning signs for Surmodics (1 shouldn't be ignored) you should be familiar with.

If you are no longer interested in Surmodics, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.