Bicycle Therapeutics (NASDAQ:BCYC) jumps 16% this week, taking three-year gains to 88%

Simply Wall St
·2 min read

Some Bicycle Therapeutics plc (NASDAQ:BCYC) shareholders are probably rather concerned to see the share price fall 61% over the last three months. But over three years, the returns would have left most investors smiling In the last three years the share price is up, 88%: better than the market.

The past week has proven to be lucrative for Bicycle Therapeutics investors, so let's see if fundamentals drove the company's three-year performance.

Check out our latest analysis for Bicycle Therapeutics

Because Bicycle Therapeutics made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Bicycle Therapeutics' revenue trended up 6.3% each year over three years. That's not a very high growth rate considering it doesn't make profits. In that time the share price is up 23% per year, which is not unreasonable given the revenue gorwth. Ultimately, the important thing is whether the company is trending to profitability. In this sort of situation it can be worth putting the stock on your watchlist. If it can become profitable, then even moderate revenue growth could grow profits quickly.

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

Bicycle Therapeutics is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

Bicycle Therapeutics shareholders are down 43% for the year, falling short of the market return. The market shed around 20%, no doubt weighing on the stock price. Fortunately the longer term story is brighter, with total returns averaging about 23% per year over three years. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 4 warning signs for Bicycle Therapeutics (1 shouldn't be ignored) that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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