The latest earnings release La Jolla Pharmaceutical Company’s (NASDAQ:LJPC) announced in December 2017 showed company earnings became less negative compared to the previous year’s level as a result of recent tailwinds Below is my commentary, albeit very simple and high-level, on how market analysts perceive La Jolla Pharmaceutical’s earnings growth outlook over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. See our latest analysis for La Jolla Pharmaceutical
Analysts’ outlook for the upcoming year seems pessimistic, with earnings becoming even more negative, arriving at -US$132.15M in 2019. However, earnings are predicted to move into an upward trend, generating -US$102.99M in 2020, and -US$5.33M in 2021.
Although it is useful to be aware of the growth rate year by year relative to today’s value, it may be more valuable to evaluate the rate at which the earnings are rising or falling every year, on average. The benefit of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of La Jolla Pharmaceutical’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended 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 57.23%. This means that, we can expect La Jolla Pharmaceutical will grow its earnings by 57.23% every year for the next couple of years.
For La Jolla Pharmaceutical, I’ve compiled three pertinent factors 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 LJPC 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 LJPC is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of LJPC? 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 pass 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.