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Abcam plc (LON:ABC): Is It A Smart Long Term Opportunity?

Simply Wall St

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After Abcam plc's (LON:ABC) earnings announcement in December 2018, the consensus outlook from analysts appear somewhat bearish, as a 10.0% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 13%. By 2020, we can expect Abcam’s bottom line to reach UK£68m, a jump from the current trailing-twelve-month of UK£62m. Below is a brief commentary on the longer term outlook the market has for Abcam. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for Abcam

How will Abcam perform in the near future?

The longer term view from the 8 analysts covering ABC is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for ABC, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

AIM:ABC Past and Future Earnings, May 13th 2019

By 2022, ABC's earnings should reach UK£90m, from current levels of UK£62m, resulting in an annual growth rate of 13%. EPS reaches £0.40 in the final year of forecast compared to the current £0.30 EPS today. With a current profit margin of 27%, this movement will result in a margin of 28% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Abcam, I've put together three key aspects you should look at:

  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 Abcam 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 Abcam is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Abcam? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.