Yahoo Finance Did Changing Sentiment Drive Botanix Pharmaceuticals's (ASX:BOT) Share Price Down By 19%?
Botanix Pharmaceuticals Limited (ASX:BOT) shareholders will doubtless be very grateful to see the share price up 44% in the last quarter. But that doesn't change the reality of under-performance over the last twelve months. In fact the stock is down 19% in the last year, well below the market return.
See our latest analysis for Botanix Pharmaceuticals
Botanix Pharmaceuticals isn't a profitable company, so it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Botanix Pharmaceuticals grew its revenue by 163% over the last year. That's well above most other pre-profit companies. The share price drop of 19% over twelve months would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. On the bright side, if this company is moving profits in the right direction, top-line growth like that could be an opportunity. Our monkey brains haven't evolved to think exponentially, so humans do tend to underestimate companies that have exponential growth.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
This free interactive report on Botanix Pharmaceuticals's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Given that the market gained 11% in the last year, Botanix Pharmaceuticals shareholders might be miffed that they lost 19%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. Putting aside the last twelve months, it's good to see the share price has rebounded by 44%, in the last ninety days. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. If you would like to research Botanix Pharmaceuticals in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
We will like Botanix Pharmaceuticals better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
