Those holding Prenetics Global Limited (NASDAQ:PRE) shares would be relieved that the share price has rebounded 30% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios.    Still, the 30-day jump doesn't change the fact that longer term shareholders have seen their stock decimated by the 81% share price drop in the last twelve months.  

In spite of the firm bounce in price, Prenetics Global's price-to-sales (or "P/S") ratio of 0.2x might still make it look like a buy right now compared to the Healthcare industry in the United States, where around half of the companies have P/S ratios above 1x and even P/S above 3x 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 limited.  

Check out our latest analysis for Prenetics Global

NasdaqGM:PRE Price to Sales Ratio vs Industry January 7th 2024

How Has Prenetics Global Performed Recently?

Prenetics Global could be doing better as its revenue has been going backwards lately while most other companies have been seeing positive revenue growth.   Perhaps the P/S remains low as investors think the prospects of strong revenue growth aren't on the horizon.  If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.    

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Prenetics Global.

Do Revenue Forecasts Match The Low P/S Ratio?  

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

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 3.0%.   In spite of this, the company still managed to deliver immense revenue growth over the last three years.  So while the company has done a great job in the past, it's somewhat concerning to see revenue growth decline so harshly.  

Looking ahead now, revenue is anticipated to slump, contracting by 62% during the coming year according to the two analysts following the company.  Meanwhile, the broader industry is forecast to expand by 8.0%, which paints a poor picture.

With this in consideration, we find it intriguing that Prenetics Global's P/S is closely matching its industry peers.  Nonetheless, there's no guarantee the P/S has reached a floor yet with revenue going in reverse.  There's potential for the P/S to fall to even lower levels if the company doesn't improve its top-line growth.  

What Does Prenetics Global's P/S Mean For Investors?

Prenetics Global's stock price has surged recently, but its but its P/S still remains modest.      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's clear to see that Prenetics Global maintains its low P/S on the weakness of its forecast for sliding revenue, as expected.  As other companies in the industry are forecasting revenue growth, Prenetics Global's poor outlook justifies its low P/S ratio.  It's hard to see the share price rising strongly in the near future under these circumstances.    

We don't want to rain on the parade too much, but we did also find 2 warning signs for Prenetics Global (1 is a bit unpleasant!) that you need to be mindful of.  

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

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