What Should Investors Know About Swedish Orphan Biovitrum AB (publ)’s (STO:SOBI) Growth?

In March 2018, Swedish Orphan Biovitrum AB (publ) (STO:SOBI) released its earnings update. Generally, the consensus outlook from analysts appear highly confident, with profits predicted to ramp up by an impressive 57.77% next year, compared with the historical 5-year average growth rate of 49.38%. Presently, with latest-twelve-month earnings at kr1.46b, we should see this growing to kr2.31b by 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.

Check out our latest analysis for Swedish Orphan Biovitrum

What can we expect from Swedish Orphan Biovitrum in the longer term?

The longer term expectations from the 8 analysts of SOBI is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
OM:SOBI Future Profit July 17th 18
OM:SOBI Future Profit July 17th 18
This results in an annual growth rate of 15.17% based on the most recent earnings level of kr1.15b to the final forecast of kr2.60b by 2021. This leads to an EPS of SEK12.3 in the final year of projections relative to the current EPS of SEK4.27. The bottom-line growth seems to be caused by cost cutting activities, as revenues is expected to grow much slower than earnings. In 2021, SOBI’s profit margin will have expanded from 17.64% to 25.32%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Swedish Orphan Biovitrum, I’ve put together three fundamental factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Swedish Orphan Biovitrum 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 Swedish Orphan Biovitrum is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Swedish Orphan Biovitrum? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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