Spruce Biosciences, Inc. (NASDAQ:SPRB) Just Reported Earnings, And Analysts Cut Their Target Price
Spruce Biosciences, Inc. (NASDAQ:SPRB) investors will be delighted, with the company turning in some strong numbers with its latest results. The results overall were credible, with revenues of US$10m beating expectations by 18%. Statutory losses were US$1.24 per share, 11% below what the analysts had forecast. 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.
See our latest analysis for Spruce Biosciences
After the latest results, the consensus from Spruce Biosciences' seven analysts is for revenues of US$4.61m in 2024, which would reflect a substantial 54% decline in revenue compared to the last year of performance. Losses are expected to hold steady at around US$1.18. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$5.26m and losses of US$1.44 per share in 2024. 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 fell 68% to US$2.75, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Spruce Biosciences at US$4.00 per share, while the most bearish prices it at US$2.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 54% by the end of 2024. This indicates a significant reduction from annual growth of 103% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 17% per year. It's pretty clear that Spruce Biosciences' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Still, earnings per share are more important to value creation for shareholders. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Spruce Biosciences' 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. At Simply Wall St, we have a full range of analyst estimates for Spruce Biosciences going out to 2026, 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 Spruce Biosciences (1 is significant!) that we have uncovered.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
