Celebrations may be in order for KalVista Pharmaceuticals, Inc. (NASDAQ:KALV) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The revenue forecast for next year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.
Following the upgrade, the consensus from seven analysts covering KalVista Pharmaceuticals is for revenues of US$4.6m in 2021, implying a substantial 61% decline in sales compared to the last 12 months. Losses are supposed to balloon 55% to US$2.74 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$5.6m and losses of US$2.84 per share in 2021. We can see there's definitely been a change in sentiment in this update, with the analysts administering a meaningful downgrade to next year's revenue estimates, while at the same time reducing their loss estimates.
The consensus price target was broadly unchanged at US$26.29, implying that the business is performing roughly in line with expectations, despite adjustments to both revenue and earnings estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on KalVista Pharmaceuticals, with the most bullish analyst valuing it at US$31.00 and the most bearish at US$19.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 61%, a significant reduction from annual growth of 53% 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 24% annually for the foreseeable future. It's pretty clear that KalVista Pharmaceuticals' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Seeing the dramatic upgrade to next year's forecasts, it might be time to take another look at KalVista Pharmaceuticals.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple KalVista Pharmaceuticals analysts - going out to 2025, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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