There's been a major selloff in Aquestive Therapeutics, Inc. (NASDAQ:AQST) shares in the week since it released its annual report, with the stock down 56% to US$1.68. Sales hit US$53m in line with forecasts, although the company reported a statutory loss per share of US$2.61 that was somewhat smaller than analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the six analysts covering Aquestive Therapeutics provided consensus estimates of US$41.9m revenue in 2020, which would reflect a stressful 20% decline on its sales over the past 12 months. Statutory losses are forecast to balloon 33% to US$1.74 per share. Before this earnings announcement, analysts had been forecasting revenues of US$43.9m and losses of US$2.22 per share in 2020. Although analysts have lowered their sales forecasts, they've also made a considerable lift to their earnings per share estimates, which implies there's been something of an uptick in sentiment following the latest results.
There was no major change to the US$18.17 average analyst price target, suggesting that the adjustments to revenue and earnings are not expected to have a long-term impact on the business. 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 Aquestive Therapeutics analyst has a price target of US$36.00 per share, while the most pessimistic values it at US$9.00. With such a wide range in price targets, analysts are almost certainly baking in outcomes as diverse as total success and probable failure in the underlying business. With this in mind, we wouldn't assign too much meaning to the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Aquestive Therapeutics's past performance and to peers in the same market. One thing that stands out from these estimates is that, even though revenues are forecast to keep falling, the decline is expected to accelerate. Analysts have modelled a 20% decline next year, compared to a historical decline of 5.2% per annum for the past three years. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue decline 5.0% per year. So it looks like Aquestive Therapeutics is also expected to see its revenues decline at a faster rate 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. Still, earnings per share are more important to value creation for shareholders. The consensus price target held steady at US$18.17, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Aquestive Therapeutics analysts - going out to 2024, and you can see them free on our platform here.
You can also see whether Aquestive Therapeutics is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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