The latest earnings release La Jolla Pharmaceutical Company's (NASDAQ:LJPC) announced in December 2018 suggested that losses became smaller relative to the prior year's level as a result of recent tailwinds Today I want to provide a brief commentary on how market analysts view La Jolla Pharmaceutical's earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Check out our latest analysis for La Jolla Pharmaceutical
Analysts' expectations for the coming year seems positive, with earnings becoming less negative, generating -US$136.2m in 2020. However, earnings should fall off in the following year, reducing to -US$115.6m in 2021 and -US$100.5m in 2022.
Although it’s useful to understand the growth rate year by year relative to today’s figure, it may be more beneficial determining the rate at which the business is moving on average every year. The pro of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of La Jolla Pharmaceutical's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put 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 46%. This means that, we can expect La Jolla Pharmaceutical will grow its earnings by 46% every year for the next couple of years.
Next Steps:
For La Jolla Pharmaceutical, I've put together three key factors you should look at:
- 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.
- Valuation: What is LJPC 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 LJPC is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of LJPC? 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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