With a price-to-sales (or "P/S") ratio of 22.9x Blueprint Medicines Corporation (NASDAQ:BPMC) may be sending very bearish signals at the moment, given that almost half of all the Biotechs companies in the United States have P/S ratios under 13.5x and even P/S lower than 4x 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 so lofty.
Check out our latest analysis for Blueprint Medicines
NasdaqGS:BPMC Price to Sales Ratio vs Industry January 29th 2024
What Does Blueprint Medicines' P/S Mean For Shareholders?
Blueprint Medicines could be doing better as its revenue has been going backwards lately while most other companies have been seeing positive revenue growth. 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.
Keen to find out how analysts think Blueprint Medicines' future stacks up against the industry? In that case, our free report is a great place to start.
How Is Blueprint Medicines' Revenue Growth Trending?
The only time you'd be truly comfortable seeing a P/S as steep as Blueprint Medicines' is when the company's growth is on track to outshine the industry decidedly.
Retrospectively, the last year delivered a frustrating 21% decrease to the company's top line. As a result, revenue from three years ago have also fallen 73% overall. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.
Turning to the outlook, the next three years should generate growth of 51% each year as estimated by the analysts watching the company. That's shaping up to be materially lower than the 231% per annum growth forecast for the broader industry.
In light of this, it's alarming that Blueprint Medicines' P/S sits above the majority of other companies. It seems most investors are hoping for a turnaround in the company's business prospects, but the analyst cohort is not so confident this will happen. There's a good chance these shareholders are setting themselves up for future disappointment if the P/S falls to levels more in line with the growth outlook.
The Key Takeaway
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 concluded that Blueprint Medicines currently trades on a much higher than expected P/S since its forecast growth is lower than the wider industry. Right now we aren't comfortable with the high P/S as the predicted future revenues aren't likely to support such positive sentiment for long. Unless these conditions improve markedly, it's very challenging to accept these prices as being reasonable.
It is also worth noting that we have found 1 warning sign for Blueprint Medicines that you need to take into consideration.
If these risks are making you reconsider your opinion on Blueprint Medicines, explore our interactive list of high quality stocks to get an idea of what else is out there.
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オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。