Yahoo Finance Neuren Pharmaceuticals Limited Just Missed Earnings - But Analysts Have Updated Their Models
Neuren Pharmaceuticals Limited (ASX:NEU) came out with its interim results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks like a pretty bad result, all things considered. Although revenues of AU$24m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 80% to hit AU$0.061 per share. The 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Neuren Pharmaceuticals
After the latest results, the consensus from Neuren Pharmaceuticals' six analysts is for revenues of AU$136.8m in 2024, which would reflect a painful 29% decline in revenue compared to the last year of performance. Statutory earnings per share are expected to plummet 35% to AU$0.60 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$130.2m and earnings per share (EPS) of AU$0.61 in 2024. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a small lift in to revenue forecasts.
Even though revenue forecasts increased, there was no change to the consensus price target of AU$26.57, suggesting the analysts are focused on earnings as the driver of value creation. 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. There are some variant perceptions on Neuren Pharmaceuticals, with the most bullish analyst valuing it at AU$30.00 and the most bearish at AU$22.50 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 50% annualised decline to the end of 2024. That is a notable change from historical growth of 82% 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 40% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Neuren Pharmaceuticals is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also upgraded their revenue estimates, although our data indicates it is expected to perform worse than the wider industry. 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.
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 estimates - from multiple Neuren Pharmaceuticals analysts - going out to 2026, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 1 warning sign for Neuren Pharmaceuticals that you need to be mindful of.
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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.
