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There's No Escaping Coherus BioSciences, Inc.'s (NASDAQ:CHRS) Muted Revenues Despite A 38% Share Price Rise
Despite an already strong run, Coherus BioSciences, Inc. (NASDAQ:CHRS) shares have been powering on, with a gain of 38% in the last thirty days. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 25% in the last twelve months.
Although its price has surged higher, Coherus BioSciences may still be sending very bullish signals at the moment with its price-to-sales (or "P/S") ratio of 0.6x, since almost half of all companies in the Biotechs industry in the United States have P/S ratios greater than 9.7x and even P/S higher than 61x are not unusual. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so limited.
See our latest analysis for Coherus BioSciences
How Coherus BioSciences Has Been Performing
Recent times haven't been great for Coherus BioSciences as its revenue has been rising slower than most other companies. The P/S ratio is probably low because investors think this lacklustre revenue performance isn't going to get any better. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.
Keen to find out how analysts think Coherus BioSciences' future stacks up against the industry? In that case, our free report is a great place to start.Is There Any Revenue Growth Forecasted For Coherus BioSciences?
In order to justify its P/S ratio, Coherus BioSciences would need to produce anemic growth that's substantially trailing the industry.
If we review the last year of revenue growth, the company posted a terrific increase of 44%. Still, revenue has fallen 16% 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 2.6% per year as estimated by the seven analysts watching the company. With the industry predicted to deliver 114% growth per year, the company is positioned for a weaker revenue result.
With this in consideration, its clear as to why Coherus BioSciences' P/S is falling short industry peers. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.
What We Can Learn From Coherus BioSciences' P/S?
Even after such a strong price move, Coherus BioSciences' P/S still trails the rest of the industry. 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.
As we suspected, our examination of Coherus BioSciences' analyst forecasts revealed that its inferior revenue outlook is contributing to its low P/S. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. The company will need a change of fortune to justify the P/S rising higher in the future.
It's always necessary to consider the ever-present spectre of investment risk. We've identified 5 warning signs with Coherus BioSciences (at least 2 which can't be ignored), and understanding these should be part of your investment process.
If these risks are making you reconsider your opinion on Coherus BioSciences, 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.
About NasdaqGM:CHRS
Coherus BioSciences
A biopharmaceutical company, focuses on the research, development, and commercialization of cancer treatments primarily in the United States.
Moderate and fair value.