WEBULL

Investors Don't See Light At End Of Legend Biotech Corporation's (NASDAQ:LEGN) Tunnel And Push Stock Down 26%

Simply Wall St · 3d ago

The Legend Biotech Corporation (NASDAQ:LEGN) share price has fared very poorly over the last month, falling by a substantial 26%. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 35% share price drop.

Following the heavy fall in price, Legend Biotech's price-to-sales (or "P/S") ratio of 4.7x might make it look like a strong buy right now compared to the wider Biotechs industry in the United States, where around half of the companies have P/S ratios above 11.8x and even P/S above 100x are quite common. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so limited.

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Check out our latest analysis for Legend Biotech

ps-multiple-vs-industry
NasdaqGS:LEGN Price to Sales Ratio vs Industry December 11th 2025

How Has Legend Biotech Performed Recently?

With revenue growth that's inferior to most other companies of late, Legend Biotech has been relatively sluggish. It seems that many are expecting the uninspiring revenue performance to persist, which has repressed the growth of the P/S ratio. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

Want the full picture on analyst estimates for the company? Then our free report on Legend Biotech will help you uncover what's on the horizon.

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

In order to justify its P/S ratio, Legend Biotech would need to produce anemic growth that's substantially trailing the industry.

Taking a look back first, we see that the company grew revenue by an impressive 75% last year. The latest three year period has also seen an incredible overall rise in revenue, aided by its incredible short-term performance. Accordingly, shareholders would have been over the moon with those medium-term rates of revenue growth.

Shifting to the future, estimates from the analysts covering the company suggest revenue should grow by 39% each year over the next three years. With the industry predicted to deliver 133% growth each year, the company is positioned for a weaker revenue result.

In light of this, it's understandable that Legend Biotech's P/S sits below the majority of other companies. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.

The Key Takeaway

Having almost fallen off a cliff, Legend Biotech's share price has pulled its P/S way down as well. 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.

As we suspected, our examination of Legend Biotech's analyst forecasts revealed that its inferior revenue outlook is contributing to its low P/S. Shareholders' pessimism on the revenue prospects for the company seems to be the main contributor to the depressed P/S. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

Many other vital risk factors can be found on the company's balance sheet. You can assess many of the main risks through our free balance sheet analysis for Legend Biotech with six simple checks.

If you're unsure about the strength of Legend Biotech's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.