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Investors in Ascendis Pharma A/S (NASDAQ:ASND) had a good week, as its shares rose 5.0% to close at US$147 following the release of its first-quarter results. Revenues beat expectations, with €2.2m in sales being 20% above estimates. The company still lost €1.32 per share, tracking roughly in line with expectations. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the consensus from Ascendis Pharma's eleven analysts is for revenues of €9.33m in 2020, which would reflect a chunky 8.4% decline in sales compared to the last year of performance. Per-share losses are expected to explode, reaching €5.82 per share. Before this earnings announcement, the analysts had been modelling revenues of €8.48m and losses of €5.58 per share in 2020. Ergo, there's been a clear change in sentiment, with the analysts lifting this year's revenue estimates, while at the same time increasing their loss per share numbers to reflect the cost of achieving this growth.
The consensus price target stayed unchanged at €163, seeming to suggest that higher forecast losses are not expected to have a long term impact on the valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Ascendis Pharma at €209 per share, while the most bearish prices it at €154. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 8.4%, a significant reduction from annual growth of 14% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 24% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Ascendis Pharma is expected to lag the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Ascendis Pharma. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. The consensus price target held steady at €163, with the latest estimates not enough to have an impact on their price targets.
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. At Simply Wall St, we have a full range of analyst estimates for Ascendis Pharma going out to 2024, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 2 warning signs for Ascendis Pharma you should know about.
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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.