Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) shareholders might be concerned after seeing the share price drop 21% in the last quarter. But the silver lining is the stock is up over five years. In that time, it is up 12%, which isn't bad, but is below the market return of 121%.
Ionis Pharmaceuticals isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
For the last half decade, Ionis Pharmaceuticals can boast revenue growth at a rate of 26% per year. Even measured against other revenue-focussed companies, that's a good result. While long-term shareholders have made money, the 2% per year gain over five years fall short of the market return. That's surprising given the strong revenue growth. Arguably this falls in a potential sweet spot - modest share price gains but good top line growth over the long term justifies investigation, in our book.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Ionis Pharmaceuticals is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for Ionis Pharmaceuticals in this interactive graph of future profit estimates.
A Different Perspective
While the broader market gained around 75% in the last year, Ionis Pharmaceuticals shareholders lost 7.1%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 2% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Ionis Pharmaceuticals better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Ionis Pharmaceuticals (at least 1 which can't be ignored) , and understanding them should be part of your investment process.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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