Regulus Therapeutics Inc. (NASDAQ:RGLS) shares fell 7.3% to US$0.64 in the week since its latest quarterly results. Revenues came in 200% better than analyst models expected, at US$18kwhile losses per share were US$0.26, in line with forecasts. 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. We thought readers would find it interesting to see analysts' latest post-earnings forecasts for next year.
After the latest results, the consensus from Regulus Therapeutics's three analysts is for revenues of US$5.00m in 2020, which would reflect a substantial 27% decline in sales compared to the last year of performance. Per-share losses are expected to explode, reaching US$0.97 per share. Before this earnings announcement, analysts had been forecasting revenues of US$2.52m and losses of US$0.99 per share in 2020. There has definitely been an improvement in perception after these results, with analysts noticeably increasing both their earnings and revenue estimates.
Analysts trimmed their valuations, with the average price target falling 10% to US$1.50, with the ongoing losses clearly weighing on sentiment despite the upgraded revenue estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Regulus Therapeutics analyst has a price target of US$2.00 per share, while the most pessimistic values it at US$1.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Further, we can compare these estimates to past performance, and see how Regulus Therapeutics forecasts compare to the wider market's forecast performance. Over the past five years, revenues have declined around 36% annually. On the bright side, analysts expect the decline to level off somewhat, with the forecast for a 27% decline in revenue next year. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue decline 18% per year. So it's pretty clear that, while it does have declining revenues, at least analysts expect Regulus Therapeutics to suffer less severely than the wider market.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Regulus Therapeutics going out to 2021, and you can see them free on our platform here.
We also provide an overview of the Regulus Therapeutics Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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