Adaptive Biotechnologies Corporation (NASDAQ:ADPT) shares have continued their recent momentum with a 31% gain in the last month alone. The last 30 days bring the annual gain to a very sharp 88%.

Since its price has surged higher, Adaptive Biotechnologies may be sending bearish signals at the moment with its price-to-sales (or "P/S") ratio of 5.4x, since almost half of all companies in the Life Sciences in the United States have P/S ratios under 3.9x and even P/S lower than 1.8x are not unusual. However, the P/S might be high for a reason and it requires further investigation to determine if it's justified.

How Has Adaptive Biotechnologies Performed Recently?

Adaptive Biotechnologies hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. It might be that many expect the dour revenue performance to recover substantially, which has kept the P/S from collapsing. If not, then existing shareholders may be extremely nervous about the viability of the share price.

How Is Adaptive Biotechnologies' Revenue Growth Trending?

Adaptive Biotechnologies' P/S ratio would be typical for a company that's expected to deliver solid growth, and importantly, perform better than the industry.

Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 1.3%. That put a dampener on the good run it was having over the longer-term as its three-year revenue growth is still a noteworthy 21% in total. Although it's been a bumpy ride, it's still fair to say the revenue growth recently has been mostly respectable for the company.

Looking ahead now, revenue is anticipated to climb by 13% during the coming year according to the eight analysts following the company. Meanwhile, the rest of the industry is forecast to only expand by 5.4%, which is noticeably less attractive.

In light of this, it's understandable that Adaptive Biotechnologies' P/S sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Final Word

Adaptive Biotechnologies' P/S is on the rise since its shares have risen strongly. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

Our look into Adaptive Biotechnologies shows that its P/S ratio remains high on the merit of its strong future revenues. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. It's hard to see the share price falling strongly in the near future under these circumstances.

Having said that, be aware Adaptive Biotechnologies is showing 2 warning signs in our investment analysis, you should know about.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

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