Jaguar Health, Inc. (NASDAQ:JAGX) Might Not Be As Mispriced As It Looks After Plunging 30%

Jaguar Health, Inc. (NASDAQ:JAGX) shares have had a horrible month, losing 30% after a relatively good period beforehand. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 83% loss during that time.

Following the heavy fall in price, Jaguar Health's price-to-sales (or "P/S") ratio of 1x might make it look like a strong buy right now compared to the wider Pharmaceuticals industry in the United States, where around half of the companies have P/S ratios above 3.1x and even P/S above 14x are quite common. 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.

Check out our latest analysis for Jaguar Health

What Does Jaguar Health's Recent Performance Look Like?

While the industry has experienced revenue growth lately, Jaguar Health's revenue has gone into reverse gear, which is not great. The P/S ratio is probably low because investors think this poor revenue performance isn't going to get any better. So while you could say the stock is cheap, investors will be looking for improvement before they see it as good value.

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

Is There Any Revenue Growth Forecasted For Jaguar Health?

In order to justify its P/S ratio, Jaguar Health would need to produce anemic growth that's substantially trailing the industry.

Retrospectively, the last year delivered a frustrating 2.2% decrease to the company's top line. However, a few very strong years before that means that it was still able to grow revenue by an impressive 117% in total over the last three years. Accordingly, while they would have preferred to keep the run going, shareholders would definitely welcome the medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 40% during the coming year according to the one analyst following the company. With the industry only predicted to deliver 26%, the company is positioned for a stronger revenue result.

With this information, we find it odd that Jaguar Health is trading at a P/S lower than the industry. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.

The Key Takeaway

Jaguar Health's P/S looks about as weak as its stock price lately. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

A look at Jaguar Health's revenues reveals that, despite glowing future growth forecasts, its P/S is much lower than we'd expect. 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.

Before you take the next step, you should know about the 5 warning signs for Jaguar Health (2 are significant!) that we have uncovered.

If you're unsure about the strength of Jaguar Health's 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.