It's been a pretty great week for ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) shareholders, with its shares surging 13% to US$50.72 in the week since its latest first-quarter results. The statutory results were not great - while revenues of US$90m were in line with expectations,ACADIA Pharmaceuticals lost US$0.57 a share in the process. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from ACADIA Pharmaceuticals' 16 analysts is for revenues of US$437.8m in 2020, which would reflect a decent 20% increase on its sales over the past 12 months. Per-share losses are supposed to see a sharp uptick, reaching US$1.90. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$449.8m and losses of US$1.89 per share in 2020.
The consensus price target was broadly unchanged at US$58.17, implying that the business is performing roughly in line with expectations, despite a downwards adjustment to forecast sales next year. 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. The most optimistic ACADIA Pharmaceuticals analyst has a price target of US$74.00 per share, while the most pessimistic values it at US$41.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that ACADIA Pharmaceuticals' revenue growth is expected to slow, with forecast 20% increase next year well below the historical 63%p.a. growth over the last five years. Compare this to the 502 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 20% per year. Factoring in the forecast slowdown in growth, it looks like ACADIA Pharmaceuticals is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target held steady at US$58.17, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on ACADIA Pharmaceuticals. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple ACADIA Pharmaceuticals analysts - going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example - ACADIA Pharmaceuticals has 2 warning signs we think you should be aware of.
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