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Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) came out with its first-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Results overall were mixed; even though revenues of US$32m beat expectations by 15%, statutory losses were US$0.36 per share, 9.1% larger than what the analysts had forecast. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from Kiniksa Pharmaceuticals' five analysts is for revenues of US$133.4m in 2022, which would reflect a major 89% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 21% to US$1.53. Before this latest report, the consensus had been expecting revenues of US$127.2m and US$1.73 per share in losses. So it seems there's been a definite increase in optimism about Kiniksa Pharmaceuticals' future following the latest consensus numbers, with a favorable reduction in the loss per share forecasts in particular.
There was no major change to the consensus price target of US$23.00, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue 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 Kiniksa Pharmaceuticals at US$28.00 per share, while the most bearish prices it at US$16.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Kiniksa Pharmaceuticals shareholders.
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 can infer from the latest estimates that forecasts expect a continuation of Kiniksa Pharmaceuticals'historical trends, as the 133% annualised revenue growth to the end of 2022 is roughly in line with the 150% annual revenue growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 12% per year. So it's pretty clear that Kiniksa Pharmaceuticals is forecast to grow substantially faster than its industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$23.00, with the latest estimates not enough to have an impact on their price targets.
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 Kiniksa Pharmaceuticals analysts - going out to 2024, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 1 warning sign for Kiniksa Pharmaceuticals that you need to be mindful of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.