RAPT Therapeutics, Inc. (NASDAQ:RAPT) missed earnings with its latest first-quarter results, disappointing overly-optimistic forecasters. It was not a great statutory result, with revenues coming in 85% lower than the analysts predicted. Unsurprisingly, earnings also fell seriously short of forecasts, turning into a per-share loss of US$0.56. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, RAPT Therapeutics' three analysts are now forecasting revenues of US$4.88m in 2020. This would be a major 422% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 43% to US$2.66. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$6.67m and losses of US$2.36 per share in 2020. 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 analysts lifted their price target 20% to US$37.50, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value. 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 RAPT Therapeutics at US$44.00 per share, while the most bearish prices it at US$33.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting RAPT Therapeutics is an easy business to forecast or the the analysts are all using similar assumptions.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at RAPT Therapeutics. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on RAPT Therapeutics. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple RAPT Therapeutics analysts - going out to 2024, and you can see them free on our platform here.
Before you take the next step you should know about the 4 warning signs for RAPT Therapeutics (2 shouldn't be ignored!) that we have uncovered.
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