Shareholders in Paratek Pharmaceuticals, Inc. (NASDAQ:PRTK) had a terrible week, as shares crashed 37% to US$2.92 in the week since its latest annual results. It looks like a moderately negative result overall with revenues falling 14% short of analyst estimates at US$17m. Statutory losses were US$3.93 per share, roughly in line with what analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Paratek Pharmaceuticals after the latest results.
After the latest results, the six analysts covering Paratek Pharmaceuticals are now predicting revenues of US$80.9m in 2020. If met, this would reflect a huge 389% improvement in sales compared to the last 12 months. Per-share statutory losses are expected to explode, reaching US$2.19 per share. Before this latest report, the consensus had been expecting revenues of US$83.2m and US$2.04 per share in losses. While revenue forecasts have been revised downwards, analysts look to have become more optimistic on the company's earnings power, given the to earnings per share forecasts.
There was no major change to the consensus price target of US$16.80, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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. There are some variant perceptions on Paratek Pharmaceuticals, with the most bullish analyst valuing it at US$34.00 and the most bearish at US$6.00 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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.
In addition, we can look to Paratek Pharmaceuticals's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. It's clear from the latest estimates that Paratek Pharmaceuticals's rate of growth is expected to accelerate meaningfully, with forecast 389% revenue growth noticeably faster than its historical growth of 36%p.a. 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 5.0% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Paratek Pharmaceuticals is expected to grow much faster than its market.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses next year, perhaps suggesting Paratek Pharmaceuticals is moving incrementally towards profitability. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will 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.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Paratek Pharmaceuticals going out to 2024, and you can see them free on our platform here..
You can also see whether Paratek Pharmaceuticals is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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