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What Should You Know About Five Prime Therapeutics, Inc.'s (NASDAQ:FPRX) Earnings Trajectory?

Simply Wall St

In December 2018, Five Prime Therapeutics, Inc. (NASDAQ:FPRX) released its latest earnings announcement, which showed company earnings became less negative compared to the previous year's level - great news for investors Below, I've laid out key growth figures on how market analysts perceive Five Prime Therapeutics's earnings growth outlook over the next couple of 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.

Check out our latest analysis for Five Prime Therapeutics

Analysts' expectations for the coming year seems relatively muted, with earnings continuing to flop around in the negative territory, generating -US$134.3m in 2020. Moreover, earnings are expected to fall further in the following year, decreasing to -US$113.2m in 2021 and -US$108.3m in 2022.

NasdaqGS:FPRX Past and Future Earnings, April 17th 2019

Although it is useful to be aware of the growth each year relative to today’s value, it may be more insightful analyzing the rate at which the company is moving every year, on average. The pro of this method is that it ignores near term flucuations and accounts for the overarching direction of Five Prime Therapeutics's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've inserted 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 19%. This means that, we can assume Five Prime Therapeutics will grow its earnings by 19% every year for the next few years.

Next Steps:

For Five Prime Therapeutics, I've put together three essential aspects you should further examine:

  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 FPRX 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 FPRX is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of FPRX? 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.