Investors Still Waiting For A Pull Back In BioLife Solutions, Inc. (NASDAQ:BLFS)

When close to half the companies in the Life Sciences industry in the United States have price-to-sales ratios (or "P/S") below 3.2x, you may consider BioLife Solutions, Inc. (NASDAQ:BLFS) as a stock to avoid entirely with its 12.4x P/S ratio. 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.

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See our latest analysis for BioLife Solutions

How BioLife Solutions Has Been Performing

With revenue growth that's superior to most other companies of late, BioLife Solutions has been doing relatively well. The P/S is probably high because investors think this strong revenue performance will continue. If not, then existing shareholders might be a little nervous about the viability of the share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on BioLife Solutions.

Do Revenue Forecasts Match The High P/S Ratio?

There's an inherent assumption that a company should far outperform the industry for P/S ratios like BioLife Solutions' to be considered reasonable.

Retrospectively, the last year delivered an exceptional 35% gain to the company's top line. Still, revenue has fallen 37% in total from three years ago, which is quite disappointing. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenues over that time.

Turning to the outlook, the next three years should generate growth of 20% per annum as estimated by the nine analysts watching the company. With the industry only predicted to deliver 7.1% per annum, the company is positioned for a stronger revenue result.

In light of this, it's understandable that BioLife Solutions' P/S sits above the majority of other companies. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

The Bottom Line On BioLife Solutions' P/S

It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

We've established that BioLife Solutions maintains its high P/S on the strength of its forecasted revenue growth being higher than the the rest of the Life Sciences industry, as expected. 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.

The company's balance sheet is another key area for risk analysis. You can assess many of the main risks through our free balance sheet analysis for BioLife Solutions with six simple checks.

If these risks are making you reconsider your opinion on BioLife Solutions, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.