Investors in BridgeBio Pharma, Inc. (NASDAQ:BBIO) had a good week, as its shares rose 2.6% to close at US$39.38 following the release of its third-quarter results. It was a moderately negative result overall - revenue fell 5.5% short of analyst estimates at US$8.1m, and statutory losses were in line with analyst expectations, at US$0.98 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the consensus forecast from BridgeBio Pharma's ten analysts is for revenues of US$86.7m in 2021, which would reflect a sizeable 295% improvement in sales compared to the last 12 months. Losses are expected to hold steady at around US$3.28. Before this latest report, the consensus had been expecting revenues of US$88.5m and US$3.26 per share in losses.
There was no real change to the average price target of US$48.00, suggesting that the revisions to revenue estimates are not expected to have a long-term impact on BridgeBio Pharma's valuation. 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. There are some variant perceptions on BridgeBio Pharma, with the most bullish analyst valuing it at US$60.00 and the most bearish at US$39.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the BridgeBio Pharma's past performance and to peers in the same industry. One thing stands out from these estimates, which is that BridgeBio Pharma is forecast to grow faster in the future than it has in the past, with revenues expected to grow 295%. If achieved, this would be a much better result than the 18% annual decline over the past year. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 20% next year. So it looks like BridgeBio Pharma 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. They also downgraded their revenue estimates, although industry data suggests that BridgeBio Pharma's revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$48.00, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on BridgeBio Pharma. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple BridgeBio Pharma analysts - going out to 2024, and you can see them free on our platform here.
Plus, you should also learn about the 4 warning signs we've spotted with BridgeBio Pharma (including 1 which shouldn't be ignored) .
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.