Kala Pharmaceuticals, Inc. (NASDAQ:KALA) Just Reported And Analysts Have Been Cutting Their Estimates
As you might know, Kala Pharmaceuticals, Inc. (NASDAQ:KALA) last week released its latest second-quarter, and things did not turn out so great for shareholders. It was not a great statutory result, with revenues coming in 39% lower than the analysts predicted. Unsurprisingly, earnings also fell seriously short of forecasts, turning into a per-share loss of US$0.57. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for Kala Pharmaceuticals
Taking into account the latest results, the current consensus from Kala Pharmaceuticals' seven analysts is for revenues of US$20.9m in 2021, which would reflect a huge 94% increase on its sales over the past 12 months. Losses are supposed to decline, shrinking 15% from last year to US$1.79. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$30.3m and losses of US$1.64 per share in 2021. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.
The consensus price target fell 17% to US$15.83, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. Currently, the most bullish analyst values Kala Pharmaceuticals at US$43.00 per share, while the most bearish prices it at US$4.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Kala Pharmaceuticals' growth to accelerate, with the forecast 277% annualised growth to the end of 2021 ranking favourably alongside historical growth of 38% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Kala Pharmaceuticals is expected to grow much faster than its industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Kala Pharmaceuticals. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster 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 Kala Pharmaceuticals' future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Kala Pharmaceuticals going out to 2023, and you can see them free on our platform here..
Before you take the next step you should know about the 2 warning signs for Kala Pharmaceuticals that we have uncovered.
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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