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Intercept Pharmaceuticals, Inc.'s (NASDAQ:ICPT) announced its latest earnings update in December 2018, which indicated company earnings became less negative compared to the previous year's level - great news for investors Below is my commentary, albeit very simple and high-level, on how market analysts predict Intercept Pharmaceuticals's earnings growth trajectory 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.
Analysts' expectations for this coming year seems relatively unexciting, with earnings continuing to flop around in the negative territory, generating -US$293.3m in 2020. However, earnings are expected to move into an upward direction, generating -US$297.3m in 2021, before plateauing down to -US$200.1m in 2022.
Although it is useful to understand the growth each year relative to today’s value, it may be more beneficial analyzing the rate at which the earnings are moving every year, on average. The pro of this approach is that we can get a bigger picture of the direction of Intercept Pharmaceuticals's earnings trajectory over the long run, irrespective of near term fluctuations, fluctuate up and down. To calculate this rate, I put 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 47%. This means that, we can expect Intercept Pharmaceuticals will grow its earnings by 47% every year for the next few years.
For Intercept Pharmaceuticals, I've compiled three fundamental factors you should further examine:
- 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 ICPT 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 ICPT is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ICPT? 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 firstname.lastname@example.org. 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.