Should You Add Predictive Oncology to Your Portfolio?

: POAI | Predictive Oncology Inc. News, Ratings, and Charts

POAI – Predictive Oncology, a precision medicine company focused on applying artificial intelligence to develop personalized medical treatments, has gained significant investor attention because of its potential to expand its unique services to cater to its customers and researchers exploring new cancer therapies. But given that its weak business fundamentals are not in sync with its valuation, is it worth betting on the stock now? Read more to find out.

Biotechnology company Predictive Oncology Inc. (POAI) operates a data and artificial intelligence (AI)-driven platform to develop personalized cancer therapies. The company’s subsidiaries — Soluble and TumorGenesis — are constructing new GMP facilities, which attracted investor attention. Its shares have surged 20.2% over the past month and 78.9% year-to-date. However, the stock is trading 43.9% below its 52-week high of $2.30, indicating short-term bearishness.

POAI’s strategic collaborations are helping to build next-generation tools for treating complex diseases and unique services to meet the needs of its patients better. This could drive new revenue growth opportunities. However, the highly competitive oncology drugs market and the company’s faltering financials could make investors anxious.

Here’s what could influence POAI’s performance in the near term:

Increasingly Competitive Oncology Market

The global oncology drugs market is expected to reach $167.52 billion in 2021, growing at a CAGR of 4%. With several pharmaceutical companies increasingly investing in technologies such as artificial intelligence (AI) to identify potential drug candidates with higher success rates, the oncology drugs market has become increasingly competitive. As key players in the industry remain committed to controlling costs and shrinking the drug development timeframe to win in the race to debut new treatments, competition is expected to remain fierce in the coming years. This competitive landscape could make it difficult for relatively smaller players like POAI to survive in the market.

At-the-Market Offering of Shares

In June, POAI closed its previously announced direct offering of 15.5 million shares of its common stock priced at the market, with gross proceeds of approximately $21.34 million. In addition, it issued warrants with an exercise price of $1.25 per share that would become exercisable upon the company increasing its capital stock to 200 million shares. It plans to use the net proceeds of the offering for funding its working capital. However, this could negatively impact its stock price as it would lead to dilution of existing shares.

Lackluster Financials

POAI has generated total revenue of $350,207 for the second quarter that ended June 30, 2021, up 91.6% year-over-year. However, its loss from operating activities came in at $2.6 million, while net loss stood at $2.57 million for the quarter. Moreover, POAI’s loss per share amounted to $0.05. Also, its operating expenses surged 9% year-over-year to $567,796 over this period, mainly due to higher costs related to the staff and higher AI computing costs.

Poor Profitability

Its trailing-12-month ROE, ROA, and ROTC are negative 76.6%, 42.6%, and 20.3%, respectively. Also, its trailing-12-month cash from operations stood at a negative $11.06 million. Furthermore, POAI’s asset turnover ratio of 0.03% is 90.8% lower than the industry average of 0.4%. In addition, the stock’s trailing-12-month CAPEX/Sales of 64.7% compares with the industry average of 4.1%.

Stretched Valuation

In terms of forward EV/Sales, the stock is currently trading at 21x, 202.8% higher than the industry average of 6.93x. Likewise, its forward Price/Sales ratio of 42.19x is 448.7% higher than the industry average of 7.69x.

Unfavorable POWR Ratings

POAI has an overall grade of D, which translates into a Sell rating in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

Our proprietary ratings system also evaluates each stock based on eight different categories. POAI has a D grade for Quality. The stock’s negative profit margin is reflected in this grade.

Also, it has an F grade for Value, which is consistent with the stock’s higher-than-industry EV/Sales.

In terms of Stability Grade, POAI has a D. This is justified given its relatively high beta of 2.

Beyond the grades I’ve highlighted, one can check out additional POAI grades for Sentiment, Growth, and Momentum here.

Of the 505 stocks in the F-rated Biotech industry, POAI is ranked #305.

Click here to checkout our Healthcare Sector Report for 2021

Bottom Line

Even though POAI’s new GMP facilities, which are slated for completion by the end of this year, should help it deliver more targeted approaches to cancer therapy, the company’s weak fundamentals in a heavily competitive oncology market could threaten its growth. Meanwhile, its stretched valuation and negative profit margin could pose a risk to the stock. So, the stock is best avoided now.

How Does Predictive Oncology (POAI) Stack Up Against its Peers?

While POAI has an overall grade of D, you might want to consider taking a look at its industry peers, Qiagen N.V. (QGEN), Gilead Sciences Inc. (GILD), and Exelixis, Inc. (EXEL), have Strong Buy ratings.


POAI shares were trading at $1.34 per share on Thursday morning, up $0.05 (+3.72%). Year-to-date, POAI has gained 82.96%, versus a 17.34% rise in the benchmark S&P 500 index during the same period.


About the Author: Imon Ghosh


Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
POAIGet RatingGet RatingGet Rating
QGENGet RatingGet RatingGet Rating
GILDGet RatingGet RatingGet Rating
EXELGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

10 Best POWR Ratings Stocks

Investors love using our POWR Ratings to track down stocks likely to outperform the S&P 500 (SPY). However, on any given day there are over 1,300 that are Buy rated. This leads customers to reach out to us to discover which are the BEST of these stocks. Today I share the answer including details on the current 10 best POWR Ratings stocks. Get the rest below...

:  |  News, Ratings, and Charts

Are Stocks Ready to Break to New Highs?

The stock market (SPY) is on a 5 day winning streak and now less than 1% away from the all time highs. This quickly shakes off weeks of painful pullbacks and volatility. Is the market truly ready to ascend to new heights or is this another fake out before the next leg lower? Find out the rest below...

:  |  News, Ratings, and Charts

TTSH is this Week’s Featured Stock 

The Tile Shop Holdings (TTSH) is a leading specialty retailer of manufactured and natural stone tiles. The company has staged an impressive earnings turnaround. Read more to find out why the stock is a good buy into year-end.

:  |  News, Ratings, and Charts

Buy These 3 Tech Stocks Before They Soar Further

Tech stocks, which were underperformers at the start of the year, have made their way back as investors have been buying on the dip. Many of these stocks, which include Applied Materials Inc. (AMAT), KLA Corporation (KLAC), and Amdocs Limited (DOX) are currently in an uptrend and are expected to continue this momentum.

:  |  News, Ratings, and Charts

TTSH is this Week’s Featured Stock 

The Tile Shop Holdings (TTSH) is a leading specialty retailer of manufactured and natural stone tiles. The company has staged an impressive earnings turnaround. Read more to find out why the stock is a good buy into year-end.

Read More Stories

More Predictive Oncology Inc. (POAI) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All POAI News