Liquidia Corporation (NASDAQ:LQDA) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. The market may be pricing in some blue sky too, with the share price gaining 36% to US$7.30 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
Following the upgrade, the current consensus from Liquidia's seven analysts is for revenues of US$19m in 2022 which - if met - would reflect a sizeable 36% increase on its sales over the past 12 months. Losses are expected to increase substantially, hitting US$0.78 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$17m and losses of US$0.99 per share in 2022. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a very promising decrease in loss per share in particular.
There was no major change to the consensus price target of US$12.71, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Liquidia, with the most bullish analyst valuing it at US$17.00 and the most bearish at US$4.00 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. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Liquidia's past performance and to peers in the same industry. It's clear from the latest estimates that Liquidia's rate of growth is expected to accelerate meaningfully, with the forecast 85% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 29% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.5% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Liquidia is expected to grow much faster than its industry.
The Bottom Line
The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Liquidia's prospects. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Liquidia could be a good candidate for more research.
Analysts are clearly in love with Liquidia at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as dilutive stock issuance over the past year. For more information, you can click through to our platform to learn more about this and the 2 other warning signs we've identified .
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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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