Shares of Endocyte, Inc (NASDAQ: ECYT) are receiving a lot of investor interest as of late due to the stock’s 300.3% increase over the prior three months. Shareholders are now asking themselves whether the company’s current stock price is reflective of its true value or if shares have even further upside from here.
Let’s take a look at Endocyte’s value and outlook based on its most recent financial data to see if there are any catalysts for a price change.
What Is Endocyte Worth?
Welcoming news for investors, Endocyte is still trading at a fairly cheap price. According to our 3 valuation analyses, the intrinsic value for the stock is $20.14 per share and is currently trading at $14.29 in the market. This means that there is still an opportunity to buy now.
|Analysis||Model Fair Value||Upside (Downside)|
|5-yr DCF Revenue Exit||$18.88||32.1%|
|5-yr DCF EBITDA Exit||$17.95||25.6%|
|5-yr DCF Growth Exit||$23.60||65.1%|
Click on any of the analyses above to view the latest model with real-time data.
Endocyte’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta of 0.07. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
How Much Growth Will Endocyte 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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations.
source: finbox.io data explorer
Endocyte’s revenue growth is expected to average 238.0% over the next five fiscal years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.
While many investors tend to categorize stocks as either value or growth plays, the most successful investors view growth in conjunction with a company’s value. Take legendary investor Peter Lynch for example, who is widely known for popularizing the term growth at a reasonable price (GARP).
GARP is a strategy that combines aspects of both growth and value investing techniques by finding high growth companies that don’t trade at overly high valuations. In the application of this strategy, Lynch achieved 29% annualized returns as the manager of Fidelity’s Magellan Fund from 1977 to 1990. Needless to say the importance of analyzing a company’s fair value in addition to its growth prospects.
Endocyte’s optimistic future growth does not appear to have been fully factored into the current share price with the stock still trading below its intrinsic value. Therefore, it may be a good time to purchase shares or increase your position in the company.
However, if you have not done so already, I highly recommend you complete your research on Endocyte by taking a look at the following:
Efficiency Metrics: inventory turnover is a ratio that measures the number of times a company’s inventory is sold and replaced over the year. View Endocyte’s inventory turnover here.
Risk Metrics: what is Endocyte’s CapEx coverage? This is the amount a company outlays for capital assets for each dollar it generates from those investments. View the company’s CapEx coverage here.
Valuation Metrics: what is Endocyte’s price to book ratio and how does it compare to its peers? Analyze Price / Book here.
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.