After Jazz Pharmaceuticals plc’s (NASDAQ:JAZZ) earnings announcement in June 2018, the consensus outlook from analysts appear somewhat bearish, with earnings expected to grow by 14% in the upcoming year relative to the higher past 5-year average growth rate of 22%. By 2019, we can expect Jazz Pharmaceuticals’s bottom line to reach US$496m, a jump from the current trailing-twelve-month US$434m. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
How will Jazz Pharmaceuticals perform in the near future?
The 18 analysts covering JAZZ view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of JAZZ’s earnings growth over these next few years.
By 2021, JAZZ’s earnings should reach US$941m, from current levels of US$488m, resulting in an annual growth rate of 23%. EPS reaches $13.61 in the final year of forecast compared to the current $8.13 EPS today. Growth in earnings appears to be a result of reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. With a current profit margin of 30%, this movement will result in a margin of 41% by 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Jazz Pharmaceuticals, there are three pertinent factors you should further research:
- 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 Jazz Pharmaceuticals 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 Jazz Pharmaceuticals is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Jazz Pharmaceuticals? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.