A Piece Of The Puzzle Missing From Xeris Biopharma Holdings, Inc.'s (NASDAQ:XERS) 25% Share Price Climb

Xeris Biopharma Holdings, Inc. (NASDAQ:XERS) shareholders have had their patience rewarded with a 25% share price jump in the last month. The annual gain comes to 119% following the latest surge, making investors sit up and take notice.

In spite of the firm bounce in price, Xeris Biopharma Holdings' price-to-sales (or "P/S") ratio of 3.9x might still make it look like a buy right now compared to the Pharmaceuticals industry in the United States, where around half of the companies have P/S ratios above 5x and even P/S above 14x are quite common. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

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See our latest analysis for Xeris Biopharma Holdings

What Does Xeris Biopharma Holdings' Recent Performance Look Like?

With revenue growth that's superior to most other companies of late, Xeris Biopharma Holdings has been doing relatively well. One possibility is that the P/S ratio is low because investors think this strong revenue performance might be less impressive moving forward. If the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.

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Is There Any Revenue Growth Forecasted For Xeris Biopharma Holdings?

In order to justify its P/S ratio, Xeris Biopharma Holdings would need to produce sluggish growth that's trailing the industry.

Retrospectively, the last year delivered an exceptional 30% gain to the company's top line. The strong recent performance means it was also able to grow revenue by 251% in total over the last three years. So we can start by confirming that the company has done a great job of growing revenue over that time.

Shifting to the future, estimates from the five analysts covering the company suggest revenue should grow by 21% per annum over the next three years. With the industry only predicted to deliver 18% each year, the company is positioned for a stronger revenue result.

In light of this, it's peculiar that Xeris Biopharma Holdings' P/S sits below the majority of other companies. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.

What We Can Learn From Xeris Biopharma Holdings' P/S?

The latest share price surge wasn't enough to lift Xeris Biopharma Holdings' P/S close to the industry median. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

A look at Xeris Biopharma Holdings' 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. It appears the market could be anticipating revenue instability, because these conditions should normally provide a boost to the share price.

Before you settle on your opinion, we've discovered 1 warning sign for Xeris Biopharma Holdings that you should be aware of.

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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.