The ASX's hottest company has gone from zero revenue to $1.2 billion in 4 years

Investors fixated on finding the next share market rocket might want to note the latest results from a healthcare phenomenon that's flown under the business media's radar.

The company's meteoric success has seen it grow revenues from virtually nothing four years ago, to guidance for up to US$800 million ($1.2 billion) in sales in financial 2025. 

That kind of revenue growth makes the financial results from 100-baggers like Afterpay (ASX: APT) and Pro Medicus (ASX: PME) look pathetic, with small-cap fund managers and brokers lining up to tell investors that this healthcare pioneer could be another massive winner. 

The business is cancer treatment star Telix Pharmaceuticals (ASX: TLX), and on April 20, UBS analysts said the shares were "still materially undervalued", even after they rose more than 20-fold over the five years.

Small-cap stock picker and Monash fund manager Shane Fitzgerald told Livewire in February that Telix is a buy as it "blew the market away" with its success.

Its chief executive and co-founder Christian Beherenbruch is known for his hard work ethic and brilliance in creating wealth for shareholders. 

The Canadian-born boss, educated in Australia and the UK, has steered Telix through the pandemic-era to regulatory approval for diagnostic solutions for prostate and kidney cancers. 

Moreover, the products' commercial launch has been a runaway success as increasing sales thump expectations.

"Ultimately, I expect the revenues of this business to triple from just their imaging products, I would say, in four years," Monash's Fitzgerald told Livewire last February. 

Market's views

Elsewhere, investment bank UBS expects Telix can win two more product approvals this year from the US healthcare regulator, the FDA. 

On April 7, the broker's local biotech analysts, including Laura Sutcliffe and Eds Lamdagan, forecast Telix to post earnings before interest and tax (EBIT) of $401 million in financial 2026 on sales it expects to rocket to $1.86 billion. 

The analysts have also pencilled in Telix making a $1 billion profit before tax by financial 2028, as new product sales flow through to the bottom line. 

The stock jumped 9.1% on Tuesday's trading update to $27.43 and if we assume UBS' forecasts for earnings of 76 cents per share in financial 2026 are ballpark correct, it trades on 36 times forward earnings. Further ahead, UBS expects the group to earn $1.27 per share in financial 2027 to put it on 21.6 times estimated profits per share in financial 2024.

These multiples are arguably modest and suggest Telix is still isn't on the radar of big investors. There's also room for some margin for error in these forecasts as today's share price is still a long way below UBS' $36 valuation on the stock on a sum of the parts basis.

However, one biotech fund manager described those forecasts as "punchy" and it's sensible to assume this remains a high-risk investment given volatile sales and expense growth. 

Other broker views

Other professional analysts that cover the stock include Bell Potter, TD Cowen, William Blair, Taylor Collison, Jeffries and CLSA. 

All are buy rated except Taylor Collison, that's on "market perform". Its forecasts for earnings per share are 83.6 cents and $1.22 for FY 2026 and FY 2027 respectively, with the analyst's lower stock valuation of $25.09 showing how higher discount rates in financial models can result in a lower present value of estimated future cash flows. 

CLSA rates Telix a "high conviction outperform" with a $33.25 price target, while the local healthcare team at Bell Potter is "buy" rated, with a $36 price target. 

Risks around the stock include the unpredictable regulatory environment for healthcare in the US under its new minister Bobby Kennedy, competition from cheaper rivals, bad acquisitions, and poor trial results as a result of product risks. Therefore the stock could sink quickly if results don't deliver on the market's expectations. 

The balance sheet is strong after Telix raised $650 million in convertible debt last year at a low rate of 2.375%, with the stock trading a long way above the reference price and maturity date out to 2029. 

Still, how much you rely on sell-side forecasts as an investor is subjective, and it's worth reading the disclaimer to this wire to gain a broader understanding of the topic.