Neuren Pharmaceuticals Limited Just Missed Earnings - But Analysts Have Updated Their Models

The half-year results for Neuren Pharmaceuticals Limited (ASX:NEU) were released last week, making it a good time to revisit its performance. Statutory earnings per share fell badly short of expectations, coming in at AU$0.061, some 80% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at AU$24m. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store 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$135.7m in 2024, which would reflect a concerning 30% decline in revenue compared to the last year of performance. Statutory earnings per share are expected to nosedive 36% to AU$0.58 in the same period. In the lead-up to this report, the analysts had been modelling revenues of AU$130.2m and earnings per share (EPS) of AU$0.61 in 2024. So it's pretty clear consensus is mixed on Neuren Pharmaceuticals after the latest results; whilethe analysts lifted revenue numbers, they also administered a minor downgrade to per-share earnings expectations.

The consensus price target was unchanged at AU$26.49, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue 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. The most optimistic Neuren Pharmaceuticals analyst has a price target of AU$29.90 per share, while the most pessimistic values it at AU$22.50. 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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 51% by the end of 2024. This indicates a significant reduction from annual growth of 82% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 40% annually for the foreseeable future. It's pretty clear that Neuren Pharmaceuticals' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Neuren Pharmaceuticals. They also upgraded their revenue estimates for next year, even though it is expected to grow slower 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 forecasts for Neuren Pharmaceuticals 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 1 warning sign for Neuren Pharmaceuticals 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.