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Shareholders in AcelRx Pharmaceuticals, Inc. (NASDAQ:ACRX) had a terrible week, as shares crashed 22% to US$0.95 in the week since its latest annual results. Revenues of US$2.3m fell short of estimates by 17%, but statutory losses were in line with expectations, at US$0.67 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
After the latest results, the four analysts covering AcelRx Pharmaceuticals are now predicting revenues of US$21.3m in 2020. If met, this would reflect a major 831% improvement in sales compared to the last 12 months. Per-share statutory losses are expected to see a sharp uptick, reaching US$0.54. Yet prior to the latest earnings, analysts had been forecasting revenues of US$28.5m and losses of US$0.59 per share in 2020. There's been a definite change in sentiment after these results, with analysts administering a to next year's revenue estimates, while at the same time substantially upgrading EPS. It's almost as though the business is forecast to reduce its focus on growth to enhance profitability.
The consensus price target fell 5.9% to US$6.40, with the dip in revenue estimates clearly souring analyst sentiment, despite the forecast reduction in losses. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic AcelRx Pharmaceuticals analyst has a price target of US$10.00 per share, while the most pessimistic values it at US$2.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. For example, we noticed that AcelRx Pharmaceuticals's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow at 831%, well above its historical decline of 28% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue grow 4.9% per year. Although AcelRx Pharmaceuticals's revenues are expected to improve, it seems that analysts are also expecting it to grow faster than the wider market.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for next year. Unfortunately analysts also downgraded their revenue estimates, although industry data suggests that AcelRx Pharmaceuticals's revenues are expected to grow faster than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of AcelRx Pharmaceuticals's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for AcelRx Pharmaceuticals going out to 2024, and you can see them free on our platform here..
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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