In This Article:
Anteo Diagnostics Limited (ASX:ADO), a AU$17.29M small-cap, is a healthcare company operating in an industry, which continues to be affected by the sustained economic uncertainty and structural trends, such as an aging population, impacting the sector globally. Healthcare analysts are forecasting for the entire industry, a strong double-digit growth of 25.82% in the upcoming year , and a massive growth of 56.56% over the next couple of years. This rate is larger than the growth rate of the Australian stock market as a whole. Below, I will examine the sector growth prospects, and also determine whether Anteo Diagnostics is a laggard or leader relative to its healthcare sector peers. Check out our latest analysis for Anteo Diagnostics
What’s the catalyst for Anteo Diagnostics’s sector growth?
Companies operating in the life sciences sector are confronted with ways to improve R&D productivity, increase the efficiency of its operations, rationalise spending on sales and marketing and enhance financial performance. Over the past year, the industry saw negative growth of -25.58%, underperforming the Australian market growth of 6.96%. Anteo Diagnostics 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 Anteo Diagnostics may be trading cheaper than its peers.
Is Anteo Diagnostics and the sector relatively cheap?
Life sciences companies are typically trading at a PE of 40.25x, higher than the rest of the Australian stock market PE of 17.23x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry returned a similar 9.46% on equities compared to the market’s 11.27%. Since Anteo Diagnostics’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Anteo Diagnostics’s value is to assume the stock should be relatively in-line with its industry.
Next Steps:
Anteo Diagnostics 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 Anteo Diagnostics’s fundamentals in order to build a holistic investment thesis.
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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.
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2. Historical Track Record: What has ADO’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.
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3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Anteo Diagnostics? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.