Synthetic biotechnology company Amyris, Inc. (AMRS) in Emeryville, Calif., operates in the clean health and beauty, and flavors and fragrance markets in Europe, North America, Asia, and South America. The company has been enhancing its skincare, hair, mother and baby, and color cosmetics product line and expects to continue expanding its offering throughout 2022 with menopause and Gen-Z beauty brands and by integrating its consumer supply chain. The company reported record consumer and core revenue in its most recent quarter. AMRS’ core revenue came in at$64.80 million, up 68% year-over-year, which included record consumer revenue of $32.20 million, which increased 86% year-over-year.
In January, AMRS and ImmunityBio, a clinical-stage immunotherapy company, completed a joint venture agreement to accelerate the commercialization of a leading next-generation COVID-19 vaccine. The joint venture’s goal is to start delivering the second-generation vaccine in 2022 as soon as practically possible. However, the companies have yet to complete human trials and receive the required regulatory approvals.
AMRS shares have slumped 76.8% in price over the past year and 19.6% year-to-date. The stock has declined 69% over the past six months to close yesterday’s trading session at $4.35. It is currently trading below its 50-day and 200-day moving averages, indicating a downtrend.
Click here to checkout our Healthcare Sector Report for 2022
Here is what could shape AMRS’ performance in the near term:
Declining Financials
AMRS’ revenues for the fiscal fourth quarter, ended Dec. 31, 2021, declined 18.8% year-over-year to $64.78 million. Also, its loss from operations grew 4,225.5% from its year-ago value to $128.86 million. Its adjusted net loss and adjusted net loss per share came in at $101.36 million and $0.33, respectively, compared to the prior-year quarter values of $6.87 million and $0.03. Also, its adjusted EBITDA decreased substantially from its year-ago value of $1.28 million to a negative $96.18 million in the fourth quarter of its fiscal 2021, due primarily to higher operating expenses and reduced strategic transaction revenue.
Poor Profitability
AMRS’ EBITDA and net income margins of negative 45.55% and 79.27%, respectively, are substantially lower than the 21.57% and 8.71% industry averages.
Moreover, AMRS’ ROE, ROA, and ROTC of negative 776.97%, 28.39%, and 24.93%, respectively, compare with the 12.86%, 5.50%, and 7.51% industry averages.
Stretched Valuation
In terms of forward EV/Sales, AMRS is currently trading at 3.58x, which is 109% higher than the 1.71x industry average Also, its 3.69 forward Price/Sales ratio is 151.4% higher than the 1.47 industry average. AMRS’ 5.45 trailing-12-month Price/Book is 128.7% higher than the industry average of 2.38x.
POWR Ratings Reflect This Bleak Prospects
AMRS has an overall D rating, which translates to Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has a D grade for Quality, which is consistent with its negative profit margins.
AMRS has a D grade for Value. Its stretched valuations justify this grade.
Of the 89 stocks in the A-rated Chemicals industry, AMRS is ranked #86.
Beyond what I have stated above, one can also view AMRS’ grades for Sentiment, Growth, Momentum, and Stability here.
View the top-rated stocks in the Chemicals industry here.
Bottom Line
If the COVID-19 vaccine commercialization plan takes off, the company is expected to garner significant returns. However, it might take some time to complete human trials and receive commercialization approvals. In addition, AMRS’ declining financials and lean profit margins are concerning, while analysts also expect its revenues to decrease 63% in the current quarter, ending March 31, 2022. Also, considering its negative ROE, we think it could be best to avoid the stock now.
How Does Amyris, Inc. (AMRS) Stack Up Against its Peers?
While AMRS has an overall POWR Rating of D, one might want to consider investing in the following Chemicals stocks with an A (Strong Buy) rating: Valhi, Inc. (VHI), American Vanguard Corp. (AVD), and Kronos Worldwide Inc (KRO).
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AMRS shares were trading at $4.35 per share on Friday morning, down $0.00 (0.00%). Year-to-date, AMRS has declined -19.59%, versus a -4.62% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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