U.S. markets close in 1 hour

Intercept Pharmaceuticals, Inc. Analysts Are Cutting Their Estimates: Here's What You Need To Know

Simply Wall St

Intercept Pharmaceuticals, Inc. (NASDAQ:ICPT) shares fell 4.5% to US$89.73 in the week since its latest full-year results. The results look positive overall; while revenues of US$252m were in line with analyst predictions, statutory losses were 4.1% smaller than expected, with Intercept Pharmaceuticals losing US$10.89 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts 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.

View our latest analysis for Intercept Pharmaceuticals

NasdaqGS:ICPT Past and Future Earnings, February 27th 2020

After the latest results, the 19 analysts covering Intercept Pharmaceuticals are now predicting revenues of US$309.5m in 2020. If met, this would reflect a sizeable 23% improvement in sales compared to the last 12 months. Statutory losses are forecast to narrow 3.7% to US$11.29 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$333.9m and losses of US$9.95 per share in 2020. From this we can that analyst sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.

There was no major change to the consensus price target of US$153, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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 Intercept Pharmaceuticals at US$257 per share, while the most bearish prices it at US$89.00. With such a wide range in price targets, analysts are almost certainly baking in outcomes as diverse as total success and probable failure in the underlying business. With this in mind, we wouldn't assign too much meaning to the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Intercept Pharmaceuticals's past performance and to peers in the same market. We would highlight that Intercept Pharmaceuticals's revenue growth is expected to slow, with forecast 23% increase next year well below the historical 60%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 17% next year. So it's pretty clear that, while Intercept Pharmaceuticals's revenue growth is expected to slow, it's still expected to grow faster than the market itself.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses next year, perhaps suggesting Intercept Pharmaceuticals is moving incrementally towards profitability. Unfortunately analysts also downgraded their revenue estimates, although industry data suggests that Intercept Pharmaceuticals's revenues are expected to grow faster than the wider market. 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.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Intercept Pharmaceuticals analysts - going out to 2024, and you can see them free on our platform here.

We also provide an overview of the Intercept Pharmaceuticals Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.