The Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB) share price has fared very poorly over the last month, falling by a substantial 30%. Still, a bad month hasn't completely ruined the past year with the stock gaining 42%, which is great even in a bull market.

After such a large drop in price, Y-mAbs Therapeutics may be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 6.2x, since almost half of all companies in the Biotechs industry in the United States have P/S ratios greater than 11.7x and even P/S higher than 67x are not unusual. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

What Does Y-mAbs Therapeutics' P/S Mean For Shareholders?

Y-mAbs Therapeutics could be doing better as it's been growing revenue less than most other companies lately. Perhaps the market is expecting the current trend of poor revenue growth to continue, which has kept the P/S suppressed. If you still like the company, you'd be hoping revenue doesn't get any worse and that you could pick up some stock while it's out of favour.

Is There Any Revenue Growth Forecasted For Y-mAbs Therapeutics?

In order to justify its P/S ratio, Y-mAbs Therapeutics would need to produce sluggish growth that's trailing the industry.

Retrospectively, the last year delivered a decent 13% gain to the company's revenues. This was backed up an excellent period prior to see revenue up by 223% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Turning to the outlook, the next three years should generate growth of 15% each year as estimated by the six analysts watching the company. Meanwhile, the rest of the industry is forecast to expand by 209% per year, which is noticeably more attractive.

With this information, we can see why Y-mAbs Therapeutics is trading at a P/S lower than the industry. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.

The Key Takeaway

The southerly movements of Y-mAbs Therapeutics' shares means its P/S is now sitting at a pretty low level. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

We've established that Y-mAbs Therapeutics maintains its low P/S on the weakness of its forecast growth being lower than the wider industry, as expected. Shareholders' pessimism on the revenue prospects for the company seems to be the main contributor to the depressed P/S. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

Plus, you should also learn about these 4 warning signs we've spotted with Y-mAbs Therapeutics (including 1 which makes us a bit uncomfortable).

If you're unsure about the strength of Y-mAbs Therapeutics' 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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