Clinuvel Pharmaceuticals Limited (ASX: CUV) shares are up nearly 90% year-to-date and 200% over the last 12 months. Is it too late to buy?
About Clinuvel
Clinuvel Pharmaceuticals is a global biopharmaceuticals company with a focus on developing and delivering treatments for patients with a range of severe genetic and skin disorders. Clinuvel’s main product is called SCENESSE, which they develop and self-distribute.
Why Is The Share Price Rising?
Clinuvel has released plenty of positive news for shareholders over the last 12 months.
In February, Clinuvel released their half-year report for the period ended 31st December 2018. The report showed net profit growth of 189% over the second half of 2017, while revenue was up 27%.
Earnings per share (EPS) increased 188% and the company has no debt on the balance sheet.
No debt, increasing revenue and high margins would all be large contributors to the recent share price growth.
In June, Clinuvel also announced their addition to the S&P/ASX 200 (INDEXASX: XJO) index, meaning they are among the largest 200 companies in Australia. Being in the ASX 200 would also put Clinuvel on the radar of large investment funds and superannuation funds, possibly opening the company up to stronger institutional investment.
Is There More Room For Growth?
Clinuvel has demonstrated an impressive growth rate for revenue and it’s always encouraging to see improving margins.
However, Clinuvel shares already look relatively expensive. Clinuvel shares currently trade on a price-earnings (PE) ratio of 100x, which is lower than some other health companies like Pro Medicus Limited (ASX: PME) and Nanosonics Ltd (ASX: NAN) but still far above what most would call a “conservative” PE ratio. You can read about PE ratios here.
It’s a similar story looking at the price-sales (PS) ratio which is around 67x for Clinuvel, 76x for Pro Medicus and 26.6x for Nanosonics.
Although these ratios have plenty of limitations, they suggest that Clinuvel is very much priced like a growth share. In other words, if you think Pro Medicus and Nanosonics are overpriced right now, there’s a good chance Clinuvel shares are overpriced as well. You can read more about Pro Medicus’ valuation here or read about Nanosonics’ valuation here.
While I like the look of Clinuvel, I’m not buying at today’s price levels.
I’m more interested in the growth shares mentioned in the free report below.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
