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Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN): Are Analysts Right About The Drop In Earnings?

Simply Wall St

Achillion Pharmaceuticals, Inc.’s (NASDAQ:ACHN) most recent earnings announcement in December 2018 suggested company earnings became less negative compared to the previous year’s level – great news for investors Today I want to provide a brief commentary on how market analysts view Achillion Pharmaceuticals’s earnings growth outlook over the next few 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.

See our latest analysis for Achillion Pharmaceuticals

Analysts’ outlook for the upcoming year seems pessimistic, with earnings becoming even more negative, reaching -US$78.7m in 2020. However, earnings are predicted to move into an upward trend, generating -US$103.8m in 2021, before plateauing down to -US$95.0m in 2022.

NasdaqGS:ACHN Past and Future Earnings, March 13th 2019

Even though it’s informative understanding the growth each year relative to today’s level, it may be more valuable to estimate the rate at which the company is rising or falling on average every year. The pro of this method is that we can get a better picture of the direction of Achillion Pharmaceuticals’s earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To compute this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is -4.9%. This means that, we can presume Achillion Pharmaceuticals will chip away at a rate of -4.9% every year for the next few years.

Next Steps:

For Achillion Pharmaceuticals, I’ve compiled three important factors you should further examine:

  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. Future Earnings: How does ACHN’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.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ACHN? 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.