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Urovant Sciences Ltd. (NASDAQ:UROV): Immense Growth Potential?

Simply Wall St

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The most recent earnings update Urovant Sciences Ltd.'s (NASDAQ:UROV) released in June 2019 signalled that losses became smaller relative to the prior year's level - great news for investors Below is my commentary, albeit very simple and high-level, on how market analysts predict Urovant Sciences's earnings growth outlook over the next couple of 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 Urovant Sciences

Analysts' outlook for next year seems pessimistic, with earnings becoming even more negative, arriving at -US$160.0m in 2020. In the following year, earnings are expected to hover around the same level before reducing to -US$95.8m in 2022.

NasdaqGS:UROV Past and Future Earnings, June 20th 2019

Even though it’s helpful to understand the growth year by year relative to today’s figure, it may be more beneficial to estimate the rate at which the business is rising or falling every year, on average. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of Urovant Sciences's earnings trajectory over time, fluctuate up and down. To compute 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 31%. This means that, we can expect Urovant Sciences will grow its earnings by 31% every year for the next couple of years.

Next Steps:

For Urovant Sciences, I've put together three fundamental 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 UROV 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 UROV is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of UROV? 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.