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There's been a notable change in appetite for Baudax Bio, Inc. (NASDAQ:BXRX) shares in the week since its third-quarter report, with the stock down 13% to US$1.00. It was a shocking result from a sales perspective, with revenues falling 93% short of analyst expectations. There was one bright spot though, with Baudax Bio reporting a surprise (statutory) profit of US$0.62, defying analyst expectations of a loss. 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 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 current consensus from Baudax Bio's three analysts is for revenues of US$21.7m in 2021, which would reflect a major 5,104% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 80% to US$0.95. Before this earnings announcement, the analysts had been modelling revenues of US$24.8m and losses of US$1.41 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 analysts have cut their price target 6.9% to US$9.00per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Baudax Bio at US$11.00 per share, while the most bearish prices it at US$7.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. With that said, earnings are more important to the long-term value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Baudax Bio's future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Baudax Bio going out to 2024, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with Baudax Bio (at least 2 which are a bit concerning) , and understanding these should be part of your investment process.
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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