Is Kestra Medical Technologies (KMTS) Overvalued After Its Recent Share Price Climb?

Kestra Medical Technologies (KMTS) has been quietly grinding higher, with the stock up around 2% on the day, nearly 9% over the past week, and roughly 24% year to date.

See our latest analysis for Kestra Medical Technologies.

That kind of steady climb in the share price, capped by a 1 day share price return of just under 2 percent, suggests momentum is building as investors warm to Kestra Medical Technologies growth story and reassess its risk profile.

If this move in Kestra Medical Technologies has you rethinking healthcare exposure, it could be worth scanning other opportunities across healthcare stocks to see what else matches your thesis.

With revenue still growing near 30 percent annually, but profits firmly in the red and the share price edging closer to analyst targets, the key question now is whether Kestra remains mispriced or markets are already baking in its future growth.

Price-to-Sales of 21.2x: Is it justified?

Kestra Medical Technologies last closed at 27 dollars, and its valuation looks stretched when viewed through the lens of its current price-to-sales multiple.

The price-to-sales ratio compares the company’s market value to its annual revenue. It is often used as a gauge for high growth yet unprofitable medical technology companies where earnings are still negative. For Kestra Medical Technologies, investors are effectively paying a steep premium today for each dollar of sales, which implies very high expectations for future scale and monetisation of its Cardiac Recovery System platform.

That premium becomes clearer against sector context, with Kestra Medical Technologies trading on a price-to-sales ratio of 21.2 times versus around 3.4 times for the wider US Medical Equipment industry and 2.7 times for its peer group. Relative to an estimated fair price-to-sales ratio of 3.6 times, the current level also sits far above where valuation could realistically normalise if growth expectations cool.

Explore the SWS fair ratio for Kestra Medical Technologies

Result: Price-to-Sales of 21.2x (OVERVALUED)

However, execution risk looms, as persistent losses and any slowdown in wearable defibrillator adoption could quickly pressure today’s premium valuation.

Find out about the key risks to this Kestra Medical Technologies narrative.

Build Your Own Kestra Medical Technologies Narrative

If you see things differently or simply prefer digging through the numbers yourself, you can shape a personalised Kestra view in just minutes: Do it your way.

A great starting point for your Kestra Medical Technologies research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

Looking for more high conviction ideas?

Do not stop with one stock when you can quickly compare smart opportunities using the Simply Wall Street Screener and sharpen your edge before the market notices.

• Capture value by targeting quality businesses trading below their cash flow potential through these 915 undervalued stocks based on cash flows, and position yourself ahead of a possible rerating.
• Spot emerging innovation by scanning these 25 AI penny stocks that are tapping into powerful AI trends and could reshape entire industries over the coming years.
• Secure dependable income streams with these 13 dividend stocks with yields > 3%, focusing on companies offering yields above 3 percent that may help stabilise returns in choppy markets.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com