Insufficient Growth At BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) Hampers Share Price

BioCryst Pharmaceuticals, Inc. -2.94%

BioCryst Pharmaceuticals, Inc.

BCRX

6.28

-2.94%

BioCryst Pharmaceuticals, Inc.'s (NASDAQ:BCRX) price-to-sales (or "P/S") ratio of 2.6x might make it look like a strong buy right now compared to the Biotechs industry in the United States, where around half of the companies have P/S ratios above 13x and even P/S above 59x are quite common. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so limited.

Check out our latest analysis for BioCryst Pharmaceuticals

ps-multiple-vs-industry
NasdaqGS:BCRX Price to Sales Ratio vs Industry April 29th 2024

How Has BioCryst Pharmaceuticals Performed Recently?

Recent times haven't been great for BioCryst Pharmaceuticals as its revenue has been rising slower than most other companies. 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.

Keen to find out how analysts think BioCryst Pharmaceuticals' 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?

BioCryst Pharmaceuticals' P/S ratio would be typical for a company that's expected to deliver very poor growth or even falling revenue, and importantly, perform much worse than the industry.

Retrospectively, the last year delivered an exceptional 22% gain to the company's top line. This great performance means it was also able to deliver immense revenue growth over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Turning to the outlook, the next three years should generate growth of 21% each year as estimated by the eleven analysts watching the company. That's shaping up to be materially lower than the 163% per annum growth forecast for the broader industry.

In light of this, it's understandable that BioCryst Pharmaceuticals' P/S sits below the majority of other companies. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.

The Final Word

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 we suspected, our examination of BioCryst Pharmaceuticals' analyst forecasts revealed that its inferior revenue outlook is contributing 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. It's hard to see the share price rising strongly in the near future under these circumstances.

Before you settle on your opinion, we've discovered 2 warning signs for BioCryst Pharmaceuticals (1 is significant!) that you should be aware of.

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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