Travere Therapeutics, Inc. (NASDAQ:TVTX) shareholders that were waiting for something to happen have been dealt a blow with a 26% share price drop in the last month. Of course, over the longer-term many would still wish they owned shares as the stock's price has soared 102% in the last twelve months.

After such a large drop in price, Travere Therapeutics may be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 5.1x, since almost half of all companies in the Biotechs industry in the United States have P/S ratios greater than 8x and even P/S higher than 46x are not unusual. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

What Does Travere Therapeutics' Recent Performance Look Like?

Recent times haven't been great for Travere Therapeutics 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 this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

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

Is There Any Revenue Growth Forecasted For Travere Therapeutics?

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

Retrospectively, the last year delivered an exceptional 61% gain to the company's top line. Pleasingly, revenue has also lifted 77% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Shifting to the future, estimates from the analysts covering the company suggest revenue should grow by 48% per year over the next three years. That's shaping up to be materially lower than the 171% each year growth forecast for the broader industry.

In light of this, it's understandable that Travere Therapeutics' P/S sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

What Does Travere Therapeutics' P/S Mean For Investors?

The southerly movements of Travere Therapeutics' shares means its P/S is now sitting at a pretty low level. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

As we suspected, our examination of Travere Therapeutics' 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. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

Having said that, be aware Travere Therapeutics is showing 2 warning signs in our investment analysis, you should know about.

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.