AcelRx Pharmaceuticals, Inc. (NASDAQ:ACRX) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasters. Statutory earnings fell substantially short of expectations, with revenues of US$1.4m missing forecasts by 52%. Losses exploded, with a per-share loss of US$0.10 some 21% below prior forecasts. 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.
Taking into account the latest results, the most recent consensus for AcelRx Pharmaceuticals from four analysts is for revenues of US$32.4m in 2021 which, if met, would be a substantial 638% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 56% to US$0.28. Before this earnings announcement, the analysts had been modelling revenues of US$27.6m and losses of US$0.28 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, withthe analysts noticeably increasing their revenue forecasts while also expecting losses per share to hold steady.
The analysts trimmed their valuations, with the average price target falling 29% to US$4.97, with the ongoing losses clearly weighing on sentiment despite the upgraded revenue estimates. 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 AcelRx Pharmaceuticals, with the most bullish analyst valuing it at US$9.00 and the most bearish at US$0.84 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the AcelRx Pharmaceuticals' past performance and to peers in the same industry. For example, we noticed that AcelRx Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with revenues forecast to grow many times over, well above its historical decline of 48% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 6.7% next year. So it looks like AcelRx Pharmaceuticals is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of AcelRx Pharmaceuticals' future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple AcelRx Pharmaceuticals analysts - going out to 2024, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with AcelRx Pharmaceuticals , and understanding them should be part of your investment process.
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