Abcam plc (LON:ABC): Will The Growth Last?

Based on Abcam plc’s (LON:ABC) earnings update on 30 June 2019, analysts seem fairly confident, with earnings expected to grow by 34% in the upcoming year against the past 5-year average growth rate of 12%. By 2020, we can expect Abcam’s bottom line to reach UK£60m, a jump from the current trailing-twelve-month of UK£45m. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

View our latest analysis for Abcam

How is Abcam going to perform in the near future?

The 8 analysts covering ABC view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for ABC, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

AIM:ABC Past and Future Earnings, September 11th 2019
AIM:ABC Past and Future Earnings, September 11th 2019

From the current net income level of UK£45m and the final forecast of UK£81m by 2022, the annual rate of growth for ABC’s earnings is 16%. EPS reaches £0.38 in the final year of forecast compared to the current £0.22 EPS today. Margins are currently sitting at 17%, which is expected to expand to 23% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Abcam, I’ve put together three essential factors you should further research:

  1. Valuation: What is Abcam worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Abcam is currently mispriced by the market.
  2. Future Earnings: How does Abcam’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Abcam? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.