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Aurinia Pharmaceuticals Inc. (TSE:AUP) Released Earnings Last Week And Analysts Lifted Their Price Target To US$32.00

Simply Wall St

Shareholders might have noticed that Aurinia Pharmaceuticals Inc. (TSE:AUP) filed its first-quarter result this time last week. The early response was not positive, with shares down 5.8% to CA$24.24 in the past week. Revenues came in at US$30k, a whole 39% below what the analysts were forecasting. Losses were a (relative) bright spot by comparison, with a per-share (statutory) loss of US$0.15 substantially smaller than what was expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts 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.

View our latest analysis for Aurinia Pharmaceuticals

TSX:AUP Past and Future Earnings May 19th 2020
TSX:AUP Past and Future Earnings May 19th 2020

Taking into account the latest results, the current consensus, from the seven analysts covering Aurinia Pharmaceuticals, is for revenues of US$168.8k in 2020, which would reflect a stressful 47% reduction in Aurinia Pharmaceuticals' sales over the past 12 months. Losses are predicted to fall substantially, shrinking 41% to US$0.77. Before this latest report, the consensus had been expecting revenues of US$179.0k and US$1.12 per share in losses. Although the revenue estimates have fallen somewhat, Aurinia Pharmaceuticals'future looks a little different to the past, with a the loss per share forecasts in particular.

The consensus price target rose 472% to US$32.00, with the analysts increasingly optimistic about shrinking losses, despite the expected decline in sales.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with the forecast 47% revenue decline a notable change from historical growth of 12% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 58% annually for the foreseeable future. It's pretty clear that Aurinia Pharmaceuticals' revenues are expected to perform substantially worse than 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Yet - earnings are more important to the intrinsic value of the business. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Aurinia Pharmaceuticals analysts - going out to 2024, 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 Aurinia Pharmaceuticals (1 makes us a bit uncomfortable!) that you need to be mindful of.

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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. Thank you for reading.