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Celebrations may be in order for AcelRx Pharmaceuticals, Inc. (NASDAQ:ACRX) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that AcelRx Pharmaceuticals will make substantially more sales than they'd previously expected.
After this upgrade, AcelRx Pharmaceuticals' five analysts are now forecasting revenues of US$17m in 2020. This would be a huge improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 24% to US$0.53. Yet before this consensus update, the analysts had been forecasting revenues of US$14m and losses of US$0.59 per share in 2020. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.
Despite these upgrades, the analysts have not made any major changes to their price target of US$5.74, implying that their latest estimates don't have a long term impact on what they think the stock is worth. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values AcelRx Pharmaceuticals at US$9.00 per share, while the most bearish prices it at US$0.69. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that AcelRx Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with revenues forecast to grow many times over, well above its historical decline of 35% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 6.1% per year. Not only are AcelRx Pharmaceuticals' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around AcelRx Pharmaceuticals' prospects. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at AcelRx Pharmaceuticals.
It's great to see the analysts upgrading their estimates, but the biggest highlight to us is that the business is expected to become profitable in the foreseeable future. You can learn more about these forecasts, for free on our platform here.
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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.
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