Today is shaping up negative for UroGen Pharma Ltd. (NASDAQ:URGN) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the downgrade, the current consensus from UroGen Pharma's six analysts is for revenues of US$107m in 2023 which - if met - would reflect a huge 71% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 40% to US$2.82. However, before this estimates update, the consensus had been expecting revenues of US$122m and US$2.65 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
The consensus price target fell 5.5% to US$30.80, implicitly signalling that lower earnings per share are a leading indicator for UroGen Pharma's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on UroGen Pharma, with the most bullish analyst valuing it at US$47.00 and the most bearish at US$11.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 54% growth on an annualised basis. That is in line with its 56% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 14% annually. So it's pretty clear that UroGen Pharma is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for next year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of UroGen Pharma's future valuation. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on UroGen Pharma after today.
There might be good reason for analyst bearishness towards UroGen Pharma, like dilutive stock issuance over the past year. For more information, you can click here to discover this and the 1 other risk we've identified.
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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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