Investors Appear Satisfied With BioLife Solutions, Inc.'s (NASDAQ:BLFS) Prospects As Shares Rocket 28%

BioLife Solutions, Inc. (NASDAQ:BLFS) shareholders would be excited to see that the share price has had a great month, posting a 28% gain and recovering from prior weakness. The last month tops off a massive increase of 116% in the last year.

Following the firm bounce in price, you could be forgiven for thinking BioLife Solutions is a stock to steer clear of with a price-to-sales ratios (or "P/S") of 8.7x, considering almost half the companies in the United States' Life Sciences industry have P/S ratios below 3.5x. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so lofty.

View our latest analysis for BioLife Solutions

What Does BioLife Solutions' P/S Mean For Shareholders?

Recent times haven't been great for BioLife Solutions as its revenue has been falling quicker than most other companies. One possibility is that the P/S ratio is high because investors think the company will turn things around completely and accelerate past most others in the industry. If not, then existing shareholders may be very nervous about the viability of the share price.

Keen to find out how analysts think BioLife Solutions' 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 High P/S?

In order to justify its P/S ratio, BioLife Solutions would need to produce outstanding growth that's well in excess of the industry.

Retrospectively, the last year delivered a frustrating 2.4% decrease to the company's top line. Still, the latest three year period has seen an excellent 89% overall rise in revenue, in spite of its unsatisfying short-term performance. Although it's been a bumpy ride, it's still fair to say the revenue growth recently has been more than adequate for the company.

Turning to the outlook, the next three years should generate growth of 9.4% per year as estimated by the nine analysts watching the company. With the industry only predicted to deliver 7.2% each year, the company is positioned for a stronger revenue result.

With this in mind, it's not hard to understand why BioLife Solutions' P/S is high relative to its industry peers. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

What Does BioLife Solutions' P/S Mean For Investors?

BioLife Solutions' P/S has grown nicely over the last month thanks to a handy boost in the share price. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

As we suspected, our examination of BioLife Solutions' analyst forecasts revealed that its superior revenue outlook is contributing to its high P/S. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

Plus, you should also learn about this 1 warning sign we've spotted with BioLife Solutions.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

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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.