Market Might Still Lack Some Conviction On Akoya Biosciences, Inc. (NASDAQ:AKYA) Even After 31% Share Price Boost

Akoya Biosciences, Inc. (NASDAQ:AKYA) shareholders are no doubt pleased to see that the share price has bounced 31% in the last month, although it is still struggling to make up recently lost ground. But the last month did very little to improve the 63% share price decline over the last year.

Although its price has surged higher, Akoya Biosciences may still be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 1.4x, since almost half of all companies in the Life Sciences industry in the United States have P/S ratios greater than 3.1x and even P/S higher than 6x are not unusual. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

Check out our latest analysis for Akoya Biosciences

How Akoya Biosciences Has Been Performing

With its revenue growth in positive territory compared to the declining revenue of most other companies, Akoya Biosciences has been doing quite well of late. Perhaps the market is expecting future revenue performance to follow the rest of the industry downwards, which has kept the P/S suppressed. Those who are bullish on Akoya Biosciences will be hoping that this isn't the case and the company continues to beat out the industry.

Keen to find out how analysts think Akoya Biosciences' future stacks up against the industry? In that case, our free report is a great place to start.

What Are Revenue Growth Metrics Telling Us About The Low P/S?

The only time you'd be truly comfortable seeing a P/S as low as Akoya Biosciences' is when the company's growth is on track to lag the industry.

Taking a look back first, we see that the company grew revenue by an impressive 18% last year. The strong recent performance means it was also able to grow revenue by 114% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Turning to the outlook, the next three years should generate growth of 17% per annum as estimated by the nine analysts watching the company. Meanwhile, the rest of the industry is forecast to only expand by 6.8% per annum, which is noticeably less attractive.

In light of this, it's peculiar that Akoya Biosciences' P/S sits below the majority of other companies. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.

The Bottom Line On Akoya Biosciences' P/S

Despite Akoya Biosciences' share price climbing recently, its P/S still lags most other companies. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

To us, it seems Akoya Biosciences currently trades on a significantly depressed P/S given its forecasted revenue growth is higher than the rest of its industry. There could be some major risk factors that are placing downward pressure on the P/S ratio. While the possibility of the share price plunging seems unlikely due to the high growth forecasted for the company, the market does appear to have some hesitation.

Having said that, be aware Akoya Biosciences is showing 3 warning signs in our investment analysis, you should know about.

If you're unsure about the strength of Akoya Biosciences' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.

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