I’ve had half an eye on FTSE 250 biotech researcher PureTech Health (LSE: PRTC) for some time. The stock has doubled over the past five years, and it’s held steady over the past 12 months.
PureTech’s share price has suffered a knock during the Covid-19 slump. But with many investors rushing for safety these days, I do think the stock market crash has thrown up some nice small-cap growth stock buys. PureTech looks like one to me.
PureTech describes itself as “a clinical-stage biotherapeutics company dedicated to discovering, developing and commercialising highly differentiated medicines for devastating diseases, including intractable cancers, lymphatic and gastrointestinal diseases, central nervous system disorders and inflammatory and immunological diseases.”
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My attention was caught this morning by the company’s plans to list on NASDAQ, the US growth stock and technology market. The firm intends to retain its London listing too, and its PRTC ticker will remain unchanged. The new launch is not for cash-raising purposes, which encourages me. The announcement said: “In light of the company’s strong cash position, the US listing will not include the issuance or offering of any shares of the Company.“
Tricky to value
Valuation is hard to determine, as PureTech is the kind of growth stock that doesn’t have any profits yet. But it does seem to be well funded through its past equity issues. At 30 June, the company had a cash position of $310.5m. And it raised an additional $101m from the sale of shares in NASDAQ-listed Karuna Therapeutics in August.
The new listing should bring it to the attention of American investors, and I reckon that could give it a boost. The immediate effect is likely to be short term. But I think PureTech Health has definite long-term growth potential.
Another growth stock buy?
I confess, I picked out my second FTSE 250 growth stock candidate for today by typing the PureTech ticker wrong. I hit on Playtech (LSE: PTEC) by mistake, but it’s also a company I’m bullish on. PlayTech provides software for both financial trading and gaming, and first-half results released in September looked good to me.
My Motley Fool colleague Kirsteen Mackay has examined the figures, so I won’t go over all that again. But I do agree with her take: “Its cutting-edge gambling software is gaining ground, and with the gaming sector booming like never before, I think it’s well placed to cash in on this.”
The Covid-19 lockdown did hurt PlayTech, and its share price took a seriously big tumble in the early days. But it’s recovering well and currently stands just 6% down so far in 2020.
Analysts predict an earnings crash of more than 50% for the full year. But even with that, we’re looking at a P/E of 19. If 2021 forecasts for a return to growth come good, that would drop to under 14. I reckon that’s a bargain price for PlayTech’s growth stock potential.
