Yahoo Finance Hikma Pharmaceuticals PLC (LON:HIK): Are Analysts’ Forecast Signalling Trouble Ahead?
After Hikma Pharmaceuticals PLC's (LON:HIK) earnings announcement on 30 June 2019, analyst consensus outlook appear bearish, as a 15% fall in profits is expected in the upcoming year. Though compared to its 5-year track record of the average earnings growth rate of -32%, this is still an improvement. With trailing-twelve-month net income at current levels of US$282m, the consensus growth rate suggests that earnings will decline to US$238m by 2020. Below is a brief commentary on the longer term outlook the market has for Hikma Pharmaceuticals. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
See our latest analysis for Hikma Pharmaceuticals
How will Hikma Pharmaceuticals perform in the near future?
Over the next three years, it seems the consensus view of the 10 analysts covering HIK is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of HIK's earnings growth over these next few years.
By 2022, HIK's earnings should reach US$279m, from current levels of US$282m, resulting in an annual growth rate of 5.7%. This leads to an EPS of $1.46 in the final year of projections relative to the current EPS of $1.17. However, the expansion of the current 14% margin is not expected to be sustained, as it begins to contract to 12% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Hikma Pharmaceuticals, I've put together three key aspects 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 Hikma Pharmaceuticals 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 Hikma Pharmaceuticals is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Hikma Pharmaceuticals? 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.
