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Genomic Health, Inc. (NASDAQ:GHDX): Will The Growth Last?

Simply Wall St

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Since Genomic Health, Inc. (NASDAQ:GHDX) released its earnings in March 2019, analyst consensus outlook appear cautiously optimistic, with earnings expected to grow by 35% in the upcoming year, though this is relatively lower than the past 5-year average earnings growth of 54%. With trailing-twelve-month net income at current levels of US$26m, we should see this rise to US$35m in 2020. Below is a brief commentary around Genomic Health's earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

View our latest analysis for Genomic Health

What can we expect from Genomic Health in the longer term?

The 9 analysts covering GHDX view its longer term outlook with a positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. 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 GHDX's earnings growth over these next few years.

NasdaqGS:GHDX Past and Future Earnings, June 24th 2019

By 2022, GHDX's earnings should reach US$50m, from current levels of US$26m, resulting in an annual growth rate of 19%. This leads to an EPS of $1.98 in the final year of projections relative to the current EPS of $0.72. Margins are currently sitting at 6.5%, which is expected to expand to 9.7% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Genomic Health, I've put together three important 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 Genomic Health 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 Genomic Health is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Genomic Health? 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.