Results: argenx SE Confounded Analyst Expectations With A Surprise Profit

Investors in argenx SE (EBR:ARGX) had a good week, as its shares rose 5.5% to close at €451 following the release of its interim results. It was overall a positive result, with revenues beating expectations by 7.5% to hit US$890m. argenx also reported a statutory profit of US$0.44, which was a nice improvement from the loss that the analysts were predicting. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on argenx after the latest results.

Check out our latest analysis for argenx

Following the latest results, argenx's 27 analysts are now forecasting revenues of US$1.98b in 2024. This would be a solid 19% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 60% to US$1.36. Before this earnings announcement, the analysts had been modelling revenues of US$1.88b and losses of US$2.67 per share in 2024. So it seems there's been a definite increase in optimism about argenx's future following the latest consensus numbers, with a very promising decrease in the loss per share forecasts in particular.

There was no major change to the consensus price target of €487, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. 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 argenx, with the most bullish analyst valuing it at €632 and the most bearish at €155 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that argenx's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 42% growth on an annualised basis. This is compared to a historical growth rate of 55% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 20% annually. Even after the forecast slowdown in growth, it seems obvious that argenx is also expected to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at €487, with the latest estimates not enough to have an impact on their price targets.

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 argenx going out to 2026, and you can see them free on our platform here..

Even so, be aware that argenx is showing 2 warning signs in our investment analysis , you should know about...

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com