Akoya Biosciences, Inc. (NASDAQ:AKYA) shares have had a horrible month, losing 33% after a relatively good period beforehand. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 53% loss during that time.

Following the heavy fall in price, Akoya Biosciences' price-to-sales (or "P/S") ratio of 1.2x might make it look like a strong buy right now compared to the wider Life Sciences industry in the United States, where around half of the companies have P/S ratios above 3.2x and even P/S above 6x 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.

How Akoya Biosciences Has Been Performing

Akoya Biosciences could be doing better as its revenue has been going backwards lately while most other companies have been seeing positive revenue growth. The P/S ratio is probably low because investors think this poor revenue performance isn't going to get any better. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

What Are Revenue Growth Metrics Telling Us About The Low P/S?

There's an inherent assumption that a company should far underperform the industry for P/S ratios like Akoya Biosciences' to be considered reasonable.

Retrospectively, the last year delivered a frustrating 5.0% decrease to the company's top line. Still, the latest three year period has seen an excellent 68% overall rise in revenue, in spite of its unsatisfying short-term performance. Accordingly, while they would have preferred to keep the run going, shareholders would definitely welcome the medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 8.1% each year during the coming three years according to the eight analysts following the company. Meanwhile, the rest of the industry is forecast to expand by 7.1% per year, which is not materially different.

With this in consideration, we find it intriguing that Akoya Biosciences' P/S is lagging behind its industry peers. It may be that most investors are not convinced the company can achieve future growth expectations.

The Key Takeaway

Akoya Biosciences' P/S looks about as weak as its stock price lately. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

It looks to us like the P/S figures for Akoya Biosciences remain low despite growth that is expected to be in line with other companies in the industry. The low P/S could be an indication that the revenue growth estimates are being questioned by the market. However, if you agree with the analysts' forecasts, you may be able to pick up the stock at an attractive price.

Before you settle on your opinion, we've discovered 3 warning signs for Akoya Biosciences that you should be aware of.

If these risks are making you reconsider your opinion on Akoya Biosciences, explore our interactive list of high quality stocks to get an idea of what else is out there.

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