Oragenics Inc (AMEX:OGEN), a US$9.61M small-cap, is a healthcare company operating in an industry, which has experienced tailwinds from issues such as higher demand driven by an aging population and the increasing prevalence of diseases and comorbidities. The demand for new drug development to meet new or persistent chronic illnesses, as well as the ongoing need for biotech drugs as Baby Boomers continue to age, are growth drivers for the optimistic outlook for the biotech industry in the long run. Healthcare analysts are forecasting for the entire industry, a fairly unexciting growth rate of 7.24% in the upcoming year , and a whopping growth of 32.56% over the next couple of years. Not surprisingly, this rate is more than double the growth rate of the US stock market as a whole. Is now the right time to pick up some shares in biotech companies? Below, I will examine the sector growth prospects, as well as evaluate whether Oragenics is lagging or leading its competitors in the industry. See our latest analysis for Oragenics
What’s the catalyst for Oragenics’s sector growth?
New R&D methods and big data analytics are creating opportunities for innovations, however, stakeholders have been challenged to keep abreast of this structural shift while under pressure to cut costs. In the previous year, the industry saw growth in the teens, beating the US market growth of 9.96%. Oragenics lags the pack with its sustained negative earnings over the past couple of years. The company’s outlook seems uncertain, with a lack of analyst coverage, which doesn’t boost our confidence in the stock. This lack of growth and transparency means Oragenics may be trading cheaper than its peers.
Is Oragenics and the sector relatively cheap?
The biotech sector’s PE is currently hovering around 28.08x, higher than the rest of the US stock market PE of 18.96x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry did return a higher 16.36% compared to the market’s 10.35%, which may be indicative of past tailwinds. Since Oragenics’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Oragenics’s value is to assume the stock should be relatively in-line with its industry.
Next Steps:Oragenics recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. If the stock has been on your watchlist for a while, now may be the time to buy, if you like its ability to deliver growth and are not highly concentrated in the healthcare industry. However, before you make a decision on the stock, I suggest you look at Oragenics’s fundamentals in order to build a holistic investment thesis.
- 1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- 2. Historical Track Record: What has OGEN’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- 3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Oragenics? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!