It is doubtless a positive to see that the Genscript Biotech Corporation (HKG:1548) share price has gained some 55% in the last three months. But that is small recompense for the exasperating returns over three years. In that time, the share price dropped 57%. So the improvement may be a real relief to some. The rise has some hopeful, but turnarounds are often precarious.

While the last three years has been tough for Genscript Biotech shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

Because Genscript Biotech made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last three years, Genscript Biotech saw its revenue grow by 26% per year, compound. That is faster than most pre-profit companies. In contrast, the share price is down 16% compound, over three years - disappointing by most standards. It seems likely that the market is worried about the continual losses. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Genscript Biotech is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Genscript Biotech in this interactive graph of future profit estimates.

A Different Perspective

Investors in Genscript Biotech had a tough year, with a total loss of 38%, against a market gain of about 19%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 2% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Genscript Biotech better, we need to consider many other factors. For instance, we've identified 1 warning sign for Genscript Biotech that you should be aware of.

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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Hong Kong exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.