Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) just released its quarterly report and things are looking bullish. Alexion Pharmaceuticals delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$1.6b, some 11% above indicated. Statutory EPS were US$2.62, an impressive 29% ahead of forecasts. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from Alexion Pharmaceuticals' 18 analysts is for revenues of US$6.49b in 2021, which would reflect a meaningful 11% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to soar 160% to US$11.29. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$6.40b and earnings per share (EPS) of US$10.05 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the nice increase in earnings per share expectations following these results.
There's been no major changes to the consensus price target of US$146, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Alexion Pharmaceuticals at US$179 per share, while the most bearish prices it at US$117. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Alexion Pharmaceuticals' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Alexion Pharmaceuticals' revenue growth will slow down substantially, with revenues next year expected to grow 11%, compared to a historical growth rate of 16% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 21% next year. Factoring in the forecast slowdown in growth, it seems obvious that Alexion Pharmaceuticals is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Alexion Pharmaceuticals' earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Alexion Pharmaceuticals. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Alexion Pharmaceuticals analysts - going out to 2024, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for Alexion Pharmaceuticals that you should be aware of.
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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