Xeris Biopharma Holdings, Inc. (NASDAQ:XERS) shareholders are no doubt pleased to see that the share price has bounced 27% in the last month, although it is still struggling to make up recently lost ground. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 21% over that time.

Although its price has surged higher, Xeris Biopharma Holdings may still be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 1.9x, since almost half of all companies in the Pharmaceuticals industry in the United States have P/S ratios greater than 2.8x and even P/S higher than 12x 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 Xeris Biopharma Holdings' Recent Performance Look Like?

With revenue growth that's superior to most other companies of late, Xeris Biopharma Holdings has been doing relatively well. Perhaps the market is expecting future revenue performance to dive, which has kept the P/S suppressed. If the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.

Do Revenue Forecasts Match The Low P/S Ratio?

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

Retrospectively, the last year delivered an exceptional 41% gain to the company's top line. Spectacularly, three year revenue growth has ballooned by several orders of magnitude, thanks in part to the last 12 months of revenue growth. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Turning to the outlook, the next three years should generate growth of 17% each year as estimated by the six analysts watching the company. With the industry predicted to deliver 17% growth each year, the company is positioned for a comparable revenue result.

With this in consideration, we find it intriguing that Xeris Biopharma Holdings' P/S is lagging behind its industry peers. Apparently some shareholders are doubtful of the forecasts and have been accepting lower selling prices.

The Final Word

Xeris Biopharma Holdings' stock price has surged recently, but its but its P/S still remains modest. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

It looks to us like the P/S figures for Xeris Biopharma Holdings remain low despite growth that is expected to be in line with other companies in the industry. Despite average revenue growth estimates, there could be some unobserved threats keeping the P/S low. It appears some are indeed anticipating revenue instability, because these conditions should normally provide more support to the share price.

And what about other risks? Every company has them, and we've spotted 2 warning signs for Xeris Biopharma Holdings (of which 1 can't be ignored!) you should know about.

If you're unsure about the strength of Xeris Biopharma Holdings' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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