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Xenon Pharmaceuticals Inc. (NASDAQ:XENE): Immense Growth Potential?

Simply Wall St

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In December 2018, Xenon Pharmaceuticals Inc. (NASDAQ:XENE) released its most recent earnings announcement, which signalled that losses became smaller relative to the prior year's level - great news for investors Below, I've presented key growth figures on how market analysts view Xenon Pharmaceuticals'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 Xenon Pharmaceuticals

Analysts' expectations for next year seems pessimistic, with earnings becoming even more negative, reaching -US$41.3m in 2020. However, earnings should move into an upward direction, arriving at -US$44.1m in 2021, before plateauing down to -US$17.6m in 2022.

NasdaqGM:XENE Past and Future Earnings, April 4th 2019

While it is useful to understand the rate of growth each year relative to today’s level, it may be more insightful to evaluate the rate at which the company is moving every year, on average. The advantage of this technique is that we can get a better picture of the direction of Xenon Pharmaceuticals's earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To compute 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 38%. This means that, we can expect Xenon Pharmaceuticals will grow its earnings by 38% every year for the next few years.

Next Steps:

For Xenon Pharmaceuticals, there are three important factors you should further research:

  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 XENE'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 XENE? 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.