Titan Pharmaceuticals Inc (NASDAQ:TTNP), a pharmaceuticals company based in United States, received a lot of attention from a substantial price movement on the NasdaqCM in the over the last few months, increasing to $2.4 at one point, and dropping to the lows of $1.5. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether TTNP’s current trading price of $1.55 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at TTNP’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Titan Pharmaceuticals
What’s the opportunity in TTNP?
According to my relative valuation model, the stock is currently overvalued. I’ve used the price-to-book ratio in this instance because there’s not enough visibility to forecast its cash flows, and its earnings doesn’t seem to reflect its true value. The stock’s ratio of 8.1x is currently well-above the industry average of 2.9x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Given that TTNP’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of TTNP look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. TTNP’s earnings over the next few years are expected to increase by 24.60%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? TTNP’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe TTNP should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.