What happened
Shares of the novel oncology company NovoCure (NVCR 4.18%) are trading lower today following the company's 2022 fourth-quarter and full-year results release this morning. Specifically, the Tumor Treating Fields product (TTFields) pioneer's stock was down by a hefty 7.36% on heavy volume as of 1:15 p.m. ET Thursday afternoon.
What's weighing on the biotech's stock price today? Although the company's financial results were essentially in line with Wall Street's consensus estimates for the three-month period, investors were clearly looking for a stronger quarter from the cancer company.
So what
Perhaps the most concerning issue is that NovoCure's net revenue fell by 4% in Q4 to $128.4 million, relative to the same period a year ago. The big deal is that NovoCure's stock has long been trading at an enormous premium (greater than 16 times trailing sales).
Bulls have been expecting the biotech's TTFields platform to rack up sales at a breakneck pace. Unfortunately, the reality of the situation is that NovoCure's biggest commercial opportunities have yet to come online.
Keeping with this theme, NovoCure is on track to roll out key top-line data in non-small cell lung cancer, recurrent ovarian cancer, brain metastases, and locally advanced pancreatic cancer over the course of the next year and a half. All of these indications could prove to be big moneymakers for the company in the years ahead.
Now what
Is NovoCure stock a screaming buy on this latest weakness? It depends on your investing horizon. The market has shown little to no patience for biotech stocks that are trading mainly on deep value over the past 18 months. By contrast, this risk-averse market has exhibited a clear preference for companies with rapidly growing free cash flows, a healthy balance sheet, and top shelf levels of revenue growth.
NovoCure appears to have the pieces in place to eventually tick these boxes. But the company isn't quite there yet.
