Sirtex Medical Limited : Relatively cheap stock to hold today?

Sirtex Medical Limited relative valuation is now UNDERVALUED. It was previously rated NEUTRAL, and has a fundamental analysis score of 89.

Our analysis is based on comparing Sirtex Medical Limited with the following peers – Starpharma Holdings Limited, Clinuvel Pharmaceuticals Limited, Alchemia Limited and OncoSil Medical Ltd (SPL-AU, CUV-AU, ACL-AU and OSL-AU).

Relative Valuation

Sirtex Medical Limited’s price of AUD 20.02 is lower than CapitalCube’s implied price of AUD 32.88. CapitalCube believes that at these levels, Sirtex Medical Limited is undervalued and has upside potential. Over the last 52 week period, the stock has fluctuated between AUD 14.80 and AUD 39.95.

Relative Valuation

Company Overview

  • Relative outperformance over the last year is in contrast to the more recent underperformance.
  • Sirtex Medical Limited currently trades at a higher Price/Book ratio (9.47) than its peer median (3.06).
  • SRX-AU‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • SRX-AU has a successful operating model with relatively high net profit margins and asset turns.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • SRX-AU‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • SRX-AU‘s revenue growth in recent years and current PE ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • SRX-AU currently does not have any debt.

Investment Outlook

Sirtex Medical Limited has a fundamental score of 89 and has a relative valuation of UNDERVALUED.

Sirtex Medical Limited is on the top left quadrant of the CapitalCube Value – Price Matrix. We classify this space a ‘Value Play’. Here, Sirtex Medical Limited is potentially undervalued, since it trades below its CapitalCube Implied Price of 32.88. At the same time, Sirtex Medical Limited is also fundamentally strong with a score of 89. This is a classic value stock definition.

Fundamentals Vs Relative Valuation

Drivers of Valuation

The market seems to expect SRX-AU to maintain its relatively high returns.

SRX-AU‘s operating performance is higher than the median of its chosen peers (ROE of 28.41% compared to the peer median ROE of -40.01%) but the market does not seem to expect higher growth relative to peers (PE of 37.29 compared to peer median of 37.29) but simply to maintain its relatively high rates of return.

The company currently trades at a higher Price/Book ratio of 9.47 compared to its peer median of 3.06.

Valuation Drivers

SRX-AU has maintained its relatively high ROE profile from the prior year-end.

ROE % (On Common Equity)
Price To Earnings

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

Sirtex Medical Ltd. engages in research and development of treatment for liver cancer. Its principal activity is to manufacture and to distribute effective liver cancer treatments utilizing small particle technology to approved markets in Asia-Pacific, Europe and the United States of America. The company was founded in 1997 and is headquartered in North Sydney, Australia.

Disclaimer

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