bluebird bio, Inc.’s (NASDAQ:BLUE) most recent earnings update in December 2018 signalled that losses became smaller relative to the prior year’s level – great news for investors Below is a brief commentary on my key takeaways on how market analysts predict bluebird bio’s earnings growth outlook over the next few years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts’ expectations for next year seems pessimistic, with earnings becoming even more negative, generating -US$651.3m in 2020. Moreover, earnings are expected to fall off in the following year, reducing to -US$618.2m in 2021 and -US$447.1m in 2022.
Although it’s useful to understand the rate of growth each year relative to today’s value, it may be more valuable to evaluate the rate at which the company is rising or falling on average every year. The advantage of this approach is that we can get a better picture of the direction of bluebird bio’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate 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 31%. This means that, we can expect bluebird bio will grow its earnings by 31% every year for the next few years.
For bluebird bio, I’ve compiled three essential aspects 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 BLUE 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 BLUE is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BLUE? 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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If you spot an error that warrants correction, please contact the editor at email@example.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.