MannKind Corporation's (NASDAQ:MNKD) Share Price Boosted 28% But Its Business Prospects Need A Lift Too

Despite an already strong run, MannKind Corporation (NASDAQ:MNKD) shares have been powering on, with a gain of 28% in the last thirty days. The last 30 days bring the annual gain to a very sharp 55%.

In spite of the firm bounce in price, MannKind may still be sending buy signals at present with its price-to-sales (or "P/S") ratio of 7.3x, considering almost half of all companies in the Biotechs industry in the United States have P/S ratios greater than 11.9x and even P/S higher than 69x aren't out of the ordinary. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

See our latest analysis for MannKind

What Does MannKind's Recent Performance Look Like?

MannKind could be doing better as it's been growing revenue less than most other companies lately. Perhaps the market is expecting the current trend of poor revenue growth to continue, which has kept the P/S suppressed. If you still like the company, you'd be hoping revenue doesn't get any worse and that you could pick up some stock while it's out of favour.

Want the full picture on analyst estimates for the company? Then our free report on MannKind will help you uncover what's on the horizon.

Is There Any Revenue Growth Forecasted For MannKind?

There's an inherent assumption that a company should underperform the industry for P/S ratios like MannKind's to be considered reasonable.

If we review the last year of revenue growth, the company posted a terrific increase of 57%. Pleasingly, revenue has also lifted 233% in aggregate from three years ago, thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing revenue over that time.

Turning to the outlook, the next three years should generate growth of 19% per year as estimated by the four analysts watching the company. With the industry predicted to deliver 144% growth per annum, the company is positioned for a weaker revenue result.

With this in consideration, its clear as to why MannKind's 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 Does MannKind's P/S Mean For Investors?

The latest share price surge wasn't enough to lift MannKind's P/S close to the industry median. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

We've established that MannKind maintains its low P/S on the weakness of its forecast growth being lower than the wider industry, as expected. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. The company will need a change of fortune to justify the P/S rising higher in the future.

And what about other risks? Every company has them, and we've spotted 5 warning signs for MannKind (of which 2 are concerning!) you should know about.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.