Is There Now An Opportunity In The Beauty Health Company (NASDAQ:SKIN)?

While The Beauty Health Company (NASDAQ:SKIN) might not have the largest market cap around , it saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQCM. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine Beauty Health’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Beauty Health

Is Beauty Health Still Cheap?

According to our valuation model, Beauty Health seems to be fairly priced at around 13.22% above our intrinsic value, which means if you buy Beauty Health today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $1.86, there’s only an insignificant downside when the price falls to its real value. What's more, Beauty Health’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Beauty Health 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. With profit expected to grow by 94% over the next year, the near-term future seems bright for Beauty Health. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? SKIN’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on SKIN, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. At Simply Wall St, we found 1 warning sign for Beauty Health and we think they deserve your attention.

If you are no longer interested in Beauty Health, 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.

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