RE: PE Ratio22 May 2020 13:09
I thought some interesting points were made about PE ratios yesterday. IMO, initally the PE ratios for covid-19 testing companies will be lower because many believe covid is a a temporary issue that will be resolved soon. However, where this perception will start to change is when the second and third waves arrive and when people realise that winter may be a very difficuilt time regarding covid.
An important part of yesterdays briefing was that only 5% of people in the UK have antibodies(17% in London), if this first wave only infected 5% of the population in three months, covid will be with us for a long time before we are anywhere near herd immunity. As people come to accept that covid isn't going to magically dissappear in a few months, covid testing companies will be valued more favourably by the market, with higher p/e ratios as their covid testing revenues will then be perceived to have more longevity.