The current price-to-cash earnings and price-to-sales valuation metrics are sitting comfortably within the historically normal valuation for this stock.
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For one thing, it is trading well below its historically normal valuation multiples.
The rally began in 2009 with very low valuations and current prices are not out of a normal valuation range.
Furthermore, the company trades at only 1.39x revenue per share, which compares favorably to the historically normal valuation of 1.49x to 2.50x.
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If the company is only able to meet the low end of its 2010 guidance it still trades below its historically normal valuation ranges.
However, both price-to-cash earnings and price-to-sales are currently sitting within the historically normal valuation levels, so it is sending neither an Undervalued nor an Overvalued signal.
At this point, we think the stock has effectively priced in a lot of bad news, and any further positive developments about Tenofovir or another drug outside of the AIDS treatments could easily send this stock higher to a more normal valuation.
For example, over the last ten years the market has historically been willing to pay between 5.7x and 11.4x cash earnings per share of CKR, but even at the offering price that metric falls short of the historically normal valuation at 5.1x.
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On a price-to-sales basis 2.3x to 6.5x has proven to be a normal market valuation historically, but it is currently only 1.2x.
Coming into the day, BGP was trading for just .05x sales per share, which is well below the historically normal price-to-sales valuation range for BGP of 0.17x to 0.33x.
For example, AMD currently trades for a price-to-sales per share of 1.00x which is on the low end of the historically normal range of .75x to 2.27x for this valuation metric.
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