The Market Doesn't Like What It Sees From Y-mAbs Therapeutics, Inc.'s (NASDAQ:YMAB) Revenues Yet As Shares Tumble 26%

Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB) shareholders that were waiting for something to happen have been dealt a blow with a 26% share price drop in the last month. The good news is that in the last year, the stock has shone bright like a diamond, gaining 104%.

Since its price has dipped substantially, Y-mAbs Therapeutics may be sending buy signals at present with its price-to-sales (or "P/S") ratio of 5.7x, considering almost half of all companies in the Biotechs industry in the United States have P/S ratios greater than 10.3x and even P/S higher than 61x aren't out of the ordinary. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

See our latest analysis for Y-mAbs Therapeutics

How Has Y-mAbs Therapeutics Performed Recently?

While the industry has experienced revenue growth lately, Y-mAbs Therapeutics' 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.

Keen to find out how analysts think Y-mAbs Therapeutics' future stacks up against the industry? In that case, our free report is a great place to start.

What Are Revenue Growth Metrics Telling Us About The Low P/S?

In order to justify its P/S ratio, Y-mAbs Therapeutics would need to produce sluggish growth that's trailing the industry.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 9.0%. Still, the latest three year period has seen an excellent 84% overall rise in revenue, in spite of its unsatisfying short-term performance. 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 14% per year during the coming three years according to the ten analysts following the company. With the industry predicted to deliver 119% growth each year, the company is positioned for a weaker revenue result.

With this in consideration, its clear as to why Y-mAbs Therapeutics' 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.

The Bottom Line On Y-mAbs Therapeutics' P/S

Y-mAbs Therapeutics' P/S has taken a dip along with its share price. 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.

As expected, our analysis of Y-mAbs Therapeutics' analyst forecasts confirms that the company's underwhelming revenue outlook is a major contributor to its low P/S. 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 4 warning signs for Y-mAbs Therapeutics (of which 1 is concerning!) you should know about.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

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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.