It's shaping up to be a tough period for Kindred Biosciences, Inc. (NASDAQ:KIN), which a week ago released some disappointing first-quarter results that could have a notable impact on how the market views the stock. Statutory earnings fell substantially short of expectations, with revenues of US$603k missing forecasts by 63%. Losses exploded, with a per-share loss of US$0.58 some 36% below prior forecasts. 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.
Taking into account the latest results, the current consensus, from the five analysts covering Kindred Biosciences, is for revenues of US$3.78m in 2020, which would reflect a definite 13% reduction in Kindred Biosciences' sales over the past 12 months. Losses are forecast to narrow 7.4% to US$1.62 per share. Before this latest report, the consensus had been expecting revenues of US$3.85m and US$1.04 per share in losses. While this year's revenue estimates held steady, there was also a loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
With the increase in forecast losses for next year, it's perhaps no surprise to see that the average price target dipped 6.2% to US$13.93, with the analysts signalling that growing losses would be a definite concern. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Kindred Biosciences analyst has a price target of US$25.00 per share, while the most pessimistic values it at US$9.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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 13%, a significant reduction from annual growth of 74% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 21% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Kindred Biosciences is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Kindred Biosciences' revenues are expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Kindred Biosciences' future valuation.
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 Kindred Biosciences analysts - going out to 2024, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 4 warning signs for Kindred Biosciences you should be aware of, and 1 of them is potentially serious.
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