In December 2018, Adverum Biotechnologies, Inc. (NASDAQ:ADVM) released its latest earnings announcement, which confirmed company earnings became less negative compared to the previous year’s level – great news for investors Below is my commentary, albeit very simple and high-level, on how market analysts view Adverum Biotechnologies’s earnings growth outlook over the next few years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts’ outlook for next year seems relatively unexciting, with earnings continuing to flop around in the negative territory, reaching -US$71.1m in 2020. However, earnings are expected to move into an upward trajectory, arriving at -US$79.3m in 2021, and -US$84.4m in 2022.
While it’s informative knowing the growth rate each year relative to today’s level, it may be more insightful to estimate the rate at which the earnings are growing every year, on average. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Adverum Biotechnologies’s earnings trajectory over time, be more volatile. To compute this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is -7.4%. This means, we can assume Adverum Biotechnologies will chip away at a rate of -7.4% every year for the next couple of years.
For Adverum Biotechnologies, I’ve put together three important aspects you should further research:
- 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.
- Future Earnings: How does ADVM’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.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ADVM? 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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.