Revenues Tell The Story For Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI) As Its Stock Soars 25%

Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI) shares have continued their recent momentum with a 25% gain in the last month alone. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 30% in the last twelve months.

After such a large jump in price, given close to half the companies operating in the United States' Life Sciences industry have price-to-sales ratios (or "P/S") below 3.4x, you may consider Maravai LifeSciences Holdings as a stock to potentially avoid with its 5.1x P/S ratio. However, the P/S might be high for a reason and it requires further investigation to determine if it's justified.

See our latest analysis for Maravai LifeSciences Holdings

What Does Maravai LifeSciences Holdings' P/S Mean For Shareholders?

Recent times haven't been great for Maravai LifeSciences Holdings as its revenue has been falling quicker than most other companies. Perhaps the market is predicting a change in fortunes for the company and is expecting them to blow past the rest of the industry, elevating the P/S ratio. However, if this isn't the case, investors might get caught out paying too much for the stock.

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

Is There Enough Revenue Growth Forecasted For Maravai LifeSciences Holdings?

The only time you'd be truly comfortable seeing a P/S as high as Maravai LifeSciences Holdings' is when the company's growth is on track to outshine the industry.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 62%. The last three years don't look nice either as the company has shrunk revenue by 28% in aggregate. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

Turning to the outlook, the next three years should generate growth of 10% each year as estimated by the analysts watching the company. With the industry only predicted to deliver 7.0% per annum, the company is positioned for a stronger revenue result.

With this in mind, it's not hard to understand why Maravai LifeSciences Holdings' 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 Maravai LifeSciences Holdings' P/S Mean For Investors?

Maravai LifeSciences Holdings' P/S is on the rise since its shares have risen strongly. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

We've established that Maravai LifeSciences Holdings 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. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. It's hard to see the share price falling strongly in the near future under these circumstances.

And what about other risks? Every company has them, and we've spotted 1 warning sign for Maravai LifeSciences Holdings you should know about.

It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).

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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.