"Hi Madamswer, I noticed on the CCR thread you put this EV metric guide: 4.x being expensive. I noticed that in a quick general observation, medical stocks typically trade in a higher range, almost double the metrics you set out here. Does this sector justifiably command a higher multiple (in your view?)"
I'm afraid that this is one of those "How long is a piece of string?" type questions.
The only answer is that I can provide is the somewhat unhelpful one of, "It depends on the business in question."
I think that part of the reason healthcare stocks trade at higher multiples - and this is a very broad generalisation - is that they are perceived to be "better" growth stories (ageing demographics in developed countries) with lower risk (often their revenue models are derived from government funding).
As I say, that's a very rough generalisation; not all healthcare stocks are superior quality; many have quite dubious, or merely conceptual, business models.
But I have to say that my instincts tell me that there is no reason that the average emerging healthcare stock should trade at double the Revenue multiple of the average non-healthcare emerging technology stock.
Apologies for not being able to be more definitive, but that's the nature of the beast.
