Need To Know: The Consensus Just Cut Its Ascendis Pharma A/S (NASDAQ:ASND) Estimates For 2020

The latest analyst coverage could presage a bad day for Ascendis Pharma A/S (NASDAQ:ASND), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. At €139, shares are up 9.4% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the latest downgrade, the twelve analysts covering Ascendis Pharma provided consensus estimates of €8.5m revenue in 2020, which would reflect a disturbing 37% decline on its sales over the past 12 months. Losses are expected to increase substantially, hitting €5.58 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of €9.6m and losses of €5.59 per share in 2020. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue forecasts while also making no real change to the loss per share numbers.

See our latest analysis for Ascendis Pharma

The consensus price target rose 5.5% to €161, seeming to imply that weaker revenue sentiment is not expected to have a major impact on the company's valuation. 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 Ascendis Pharma analyst has a price target of €201 per share, while the most pessimistic values it at €137. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Ascendis Pharma's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 37% revenue decline a notable change from historical growth of 8.7% 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 16% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Ascendis Pharma is expected to lag the wider industry.

The Bottom Line

Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given the stark change in sentiment, we'd understand if investors became more cautious on Ascendis Pharma after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Ascendis Pharma 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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