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Shareholders might have noticed that Pliant Therapeutics, Inc. (NASDAQ:PLRX) filed its quarterly result this time last week. The early response was not positive, with shares down 4.5% to US$31.15 in the past week. Revenues fell badly short of expectations, with sales of US$2.2m being some 32% below what the analysts had forecast. Statutory losses were in line with forecasts, with Pliant Therapeutics losing US$0.64 a share. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Pliant Therapeutics from four analysts is for revenues of US$16.0m in 2021 which, if met, would be a reasonable 6.0% increase on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$2.82 per share. Before this earnings announcement, the analysts had been modelling revenues of US$13.3m and losses of US$2.73 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, with the analysts significantly increasing their revenue forecasts while also expecting losses per share to increase. It looks like the revenue growth will not be achieved without incremental costs.
It will come as a surprise to learn that the consensus price target rose 8.8% to US$51.50, with the analysts clearly more interested in growing revenue, even as losses intensify. 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 Pliant Therapeutics analyst has a price target of US$63.00 per share, while the most pessimistic values it at US$40.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that Pliant Therapeutics' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 8.0% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 82% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 3.8% per year. Not only are Pliant Therapeutics' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Pliant Therapeutics going out to 2025, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 3 warning signs for Pliant Therapeutics (1 is a bit concerning!) that you need to be mindful 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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