While Novogene Co., Ltd. (SHSE:688315) might not have the largest market cap around , it saw a decent share price growth of 15% on the SHSE over the last few months. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today we will analyse the most recent data on Novogene's outlook and valuation to see if the opportunity still exists.

Is Novogene Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It's trading around 5.2% below our intrinsic value, which means if you buy Novogene today, you'd be paying a fair price for it. And if you believe that the stock is really worth CN¥15.95, then there's not much of an upside to gain from mispricing. What's more, Novogene's share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Novogene generate?

Future outlook is an important aspect when you're looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 81% over the next couple of years, the future seems bright for Novogene. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in 688315's positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you've been keeping an eye on 688315, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it's worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Novogene, you'd also look into what risks it is currently facing. Case in point: We've spotted 1 warning sign for Novogene you should be aware of.

If you are no longer interested in Novogene, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.