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Is Momenta Pharmaceuticals' (NASDAQ:MNTA) 300% Share Price Increase Well Justified?

·3-min read

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA) share price had more than doubled in just one year - up 300%. Also pleasing for shareholders was the 39% gain in the last three months. Also impressive, the stock is up 196% over three years, making long term shareholders happy, too.

View our latest analysis for Momenta Pharmaceuticals

Given that Momenta Pharmaceuticals didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last year Momenta Pharmaceuticals saw its revenue shrink by 55%. So we would not have expected the share price to rise 300%. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. Of course, it could be that the market expected this revenue drop.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
earnings-and-revenue-growth

Momenta Pharmaceuticals is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

It's nice to see that Momenta Pharmaceuticals shareholders have received a total shareholder return of 300% over the last year. That gain is better than the annual TSR over five years, which is 27%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Momenta Pharmaceuticals better, we need to consider many other factors. Take risks, for example - Momenta Pharmaceuticals has 3 warning signs we think you should be aware of.

Of course Momenta Pharmaceuticals may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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