- Oops!Something went wrong.Please try again later.
The investors in Reata Pharmaceuticals, Inc.'s (NASDAQ:RETA) will be rubbing their hands together with glee today, after the share price leapt 44% to US$185 in the week following its third-quarter results. It was a moderately negative result overall - revenue fell 5.8% short of analyst estimates at US$1.4m, although at least statutory losses were marginally smaller than expected, at US$1.94 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 consensus forecast from Reata Pharmaceuticals' four analysts is for revenues of US$22.1m in 2021, which would reflect a huge 160% improvement in sales compared to the last 12 months. Losses are expected to be contained, narrowing 15% from last year to US$9.48. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$16.9m and losses of US$10.51 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
Despite these upgrades,the analysts have not made any major changes to their price target of US$240, implying that their latest estimates don't have a long term impact on what they think the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Reata Pharmaceuticals at US$345 per share, while the most bearish prices it at US$169. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Reata Pharmaceuticals' past performance and to peers in the same industry. For example, we noticed that Reata Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 160%, well above its historical decline of 17% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 6.6% next year. So it looks like Reata Pharmaceuticals is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. 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 Reata Pharmaceuticals analysts - going out to 2024, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Reata Pharmaceuticals , and understanding these should be part of your investment process.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email firstname.lastname@example.org.