Investors in Nektar Therapeutics (NASDAQ:NKTR) from three years ago are still down 80%, even after 7.5% gain this past week

By
Simply Wall St
Published
April 14, 2022
NasdaqGS:NKTR
Source: Shutterstock

Nektar Therapeutics (NASDAQ:NKTR) shareholders will doubtless be very grateful to see the share price up 48% in the last month. But only the myopic could ignore the astounding decline over three years. To wit, the share price sky-dived 80% in that time. Arguably, the recent bounce is to be expected after such a bad drop. The thing to think about is whether the business has really turned around. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

Although the past week has been more reassuring for shareholders, they're still in the red over the last three years, so let's see if the underlying business has been responsible for the decline.

Check out our latest analysis for Nektar Therapeutics

Given that Nektar Therapeutics didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over the last three years, Nektar Therapeutics' revenue dropped 90% per year. That means its revenue trend is very weak compared to other loss making companies. And as you might expect the share price has been weak too, dropping at a rate of 22% per year. We prefer leave it to clowns to try to catch falling knives, like this stock. It's worth remembering that investors call buying a steeply falling share price 'catching a falling knife' because it is a dangerous pass time.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
NasdaqGS:NKTR Earnings and Revenue Growth April 14th 2022

Nektar Therapeutics is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Nektar Therapeutics in this interactive graph of future profit estimates.

A Different Perspective

Investors in Nektar Therapeutics had a tough year, with a total loss of 68%, against a market gain of about 1.4%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 11% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Nektar Therapeutics better, we need to consider many other factors. Even so, be aware that Nektar Therapeutics is showing 4 warning signs in our investment analysis , you should know about...

But note: Nektar Therapeutics may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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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