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    Idorsia Ltd (VTX:IDIA) Surges 28% Yet Its Low P/S Is No Reason For Excitement

    Simply Wall St·12/22/2025 04:30:57
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    Idorsia Ltd (VTX:IDIA) shares have had a really impressive month, gaining 28% after a shaky period beforehand. The last 30 days were the cherry on top of the stock's 536% gain in the last year, which is nothing short of spectacular.

    In spite of the firm bounce in price, Idorsia may still be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 4.3x, since almost half of all companies in the Biotechs industry in Switzerland have P/S ratios greater than 6.9x and even P/S higher than 31x are not unusual. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

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    Check out our latest analysis for Idorsia

    ps-multiple-vs-industry
    SWX:IDIA Price to Sales Ratio vs Industry December 22nd 2025

    How Idorsia Has Been Performing

    Recent times haven't been great for Idorsia as its revenue has been rising slower than most other companies. It seems that many are expecting the uninspiring revenue performance to persist, which has repressed the growth of the P/S ratio. If you still like the company, you'd be hoping revenue doesn't get any worse and that you could pick up some stock while it's out of favour.

    Keen to find out how analysts think Idorsia's future stacks up against the industry? In that case, our free report is a great place to start.

    What Are Revenue Growth Metrics Telling Us About The Low P/S?

    There's an inherent assumption that a company should underperform the industry for P/S ratios like Idorsia's to be considered reasonable.

    Taking a look back first, we see that the company grew revenue by an impressive 214% last year. Spectacularly, three year revenue growth has ballooned by several orders of magnitude, thanks in part to the last 12 months of revenue growth. So we can start by confirming that the company has done a tremendous job of growing revenue over that time.

    Turning to the outlook, the next year should bring diminished returns, with revenue decreasing 1.2% as estimated by the dual analysts watching the company. With the industry predicted to deliver 252% growth, that's a disappointing outcome.

    In light of this, it's understandable that Idorsia's P/S would sit below the majority of other companies. Nonetheless, there's no guarantee the P/S has reached a floor yet with revenue going in reverse. Even just maintaining these prices could be difficult to achieve as the weak outlook is weighing down the shares.

    The Final Word

    The latest share price surge wasn't enough to lift Idorsia's P/S close to the industry median. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

    It's clear to see that Idorsia maintains its low P/S on the weakness of its forecast for sliding revenue, as expected. As other companies in the industry are forecasting revenue growth, Idorsia's poor outlook justifies its low P/S ratio. It's hard to see the share price rising strongly in the near future under these circumstances.

    Don't forget that there may be other risks. For instance, we've identified 4 warning signs for Idorsia (3 don't sit too well with us) you should be aware of.

    Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.