Last week saw the newest third-quarter earnings release from Ascendis Pharma A/S (NASDAQ:ASND), an important milestone in the company's journey to build a stronger business. Revenues of €2.2m crushed expectations, although expenses also blew out, with the company reporting a loss per share of €0.53, 57% bigger 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. We thought readers would find it interesting to see analysts' latest post-earnings forecasts for next year.
Taking into account the latest results, the eleven analysts covering Ascendis Pharma provided consensus estimates of €18.5m revenue in 2020, which would reflect a considerable 14% decline on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 34% to €5.06. Before this earnings announcement, analysts had been forecasting revenues of €15.1m and losses of €5.04 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.
There were no major changes to the €141 consensus price target despite the higher revenue estimates, with analysts seeming to believe that ongoing losses have a larger impact on the valuation than growing sales. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Ascendis Pharma, with the most bullish analyst valuing it at €168 and the most bearish at €121 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Ascendis Pharma's performance in recent years. One obvious concern is that although revenues are forecast to continue shrinking, the expected 14% decline next year is substantially more severe than the 0.5% annual decline over the past five years. 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 looks like Ascendis Pharma 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. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Ascendis Pharma analysts - going out to 2023, and you can see them free on our platform here.
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