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Melinta Therapeutics, Inc. Just Reported Earnings, And Analysts Cut Their Target Price

Simply Wall St

One of the biggest stories of last week was how Melinta Therapeutics, Inc. (NASDAQ:MLNT) shares plunged 36% in the week since its latest third-quarter results, closing yesterday at US$1.40. Results look to have been somewhat negative - revenue fell 2.6% short of analyst estimates at US$16m, although losses were a relative bright spot. The per-share loss was US$15.67, 514% smaller than analysts were expecting prior to the result. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest forecasts to see what analysts are expecting for next year.

Check out our latest analysis for Melinta Therapeutics

NasdaqGS:MLNT Past and Future Earnings, November 15th 2019

Taking into account the latest results, the current consensus from Melinta Therapeutics's four analysts is for revenues of US$99.7m in 2020, which would reflect a major 22% increase on its sales over the past 12 months. Losses are forecast to balloon 75% to US$6.58 per share. Before this earnings announcement, analysts had been forecasting revenues of US$102.2m and losses of US$5.13 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 pretty serious reduction to earnings per share estimates.

The consensus price target fell 39% to US$15.00, with analysts clearly concerned about the company following the weaker revenue and earnings outlook. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Melinta Therapeutics analyst has a price target of US$15.00 per share, while the most pessimistic values it at US$15.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.

Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. Next year brings more of the same, according to analysts, with revenue forecast to grow 22%, in line with its 25% annual growth over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 5.5% per year. So although Melinta Therapeutics is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider market.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses next year, perhaps suggesting Melinta Therapeutics is moving incrementally towards profitability. Unfortunately analysts also downgraded their revenue estimates, although industry data suggests that Melinta Therapeutics's revenues are expected to grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Melinta Therapeutics's future valuation.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Melinta Therapeutics analysts - going out to 2023, and you can see them free on our platform here.

You can also see whether Melinta Therapeutics is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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.

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. Thank you for reading.