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Prothena Corporation plc (NASDAQ:PRTA): Will The Growth Last?

Simply Wall St

Prothena Corporation plc’s (NASDAQ:PRTA) released its most recent earnings update in December 2018, which signalled company earnings became less negative compared to the previous year’s level as a result of recent tailwinds Investors may find it useful to understand how market analysts perceive Prothena’s earnings growth trajectory 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.

View our latest analysis for Prothena

Analysts’ outlook for the coming year seems optimistic, with earnings becoming less negative, reaching -US$95.9m in 2020. However, earnings are expected to fall off and remain stable over the next few years, reaching -US$70.0m in 2022.

NasdaqGS:PRTA Past and Future Earnings, March 12th 2019

Although it is useful to understand the growth year by year relative to today’s value, it may be more insightful to gauge the rate at which the company is moving on average every year. The pro of this method is that we can get a bigger picture of the direction of Prothena’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 24%. This means, we can anticipate Prothena will grow its earnings by 24% every year for the next few years.

Next Steps:

For Prothena, I’ve compiled three fundamental factors 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. Future Earnings: How does PRTA’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of PRTA? 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.