Shareholders might have noticed that Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) filed its full-year result this time last week. The early response was not positive, with shares down 6.0% to US$42.89 in the past week. It was a pretty bad result overall; while revenues were in line with expectations at US$122m, statutory losses exploded to US$1.81 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 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 eight analysts covering Enanta Pharmaceuticals, is for revenues of US$103.1m in 2021, which would reflect an uneasy 16% reduction in Enanta Pharmaceuticals' sales over the past 12 months. Losses are forecast to balloon 137% to US$4.30 per share. Before this latest report, the consensus had been expecting revenues of US$104.8m and US$4.33 per share in losses.
As a result, it's unexpected to see that the consensus price target fell 9.2% to US$61.63, with the analysts seemingly becoming more concerned about ongoing losses, despite making no major changes to their forecasts. 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. The most optimistic Enanta Pharmaceuticals analyst has a price target of US$107 per share, while the most pessimistic values it at US$30.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 16% revenue decline a notable change from historical growth of 16% 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 21% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Enanta Pharmaceuticals is expected to lag 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Enanta Pharmaceuticals' 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 Enanta Pharmaceuticals' future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Enanta Pharmaceuticals. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Enanta Pharmaceuticals going out to 2025, and you can see them free on our platform here..
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.
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