Rainbows and Unicorns: Innate Pharma S.A. (EPA:IPH) Analysts Just Became A Lot More Optimistic

Shareholders in Innate Pharma S.A. (EPA:IPH) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.

Following the latest upgrade, the current consensus, from the eight analysts covering Innate Pharma, is for revenues of €47m in 2022, which would reflect an uneasy 18% reduction in Innate Pharma's sales over the past 12 months. Per-share losses are expected to explode, reaching €0.33 per share. However, before this estimates update, the consensus had been expecting revenues of €42m and €0.54 per share in losses. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

View our latest analysis for Innate Pharma

There was no major change to the consensus price target of €5.88, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Innate Pharma analyst has a price target of €8.00 per share, while the most pessimistic values it at €2.50. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One more thing stood out to us about these estimates, and it's the idea that Innate Pharma's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 33% to the end of 2022. This tops off a historical decline of 5.5% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 23% per year. So while a broad number of companies are forecast to grow, unfortunately Innate Pharma is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Innate Pharma is moving incrementally towards profitability. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Innate Pharma.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Innate Pharma analysts - going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.