Analysts Have Been Trimming Their Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) Price Target After Its Latest Report

There's been a major selloff in Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) shares in the week since it released its full-year report, with the stock down 30% to US$5.85. The statutory results were mixed overall, with revenues of US$176m in line with analyst forecasts, but losses of US$0.54 per share, some 3.5% larger than the analysts were predicting. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Aurinia Pharmaceuticals

Taking into account the latest results, the current consensus from Aurinia Pharmaceuticals' seven analysts is for revenues of US$225.7m in 2024. This would reflect a huge 29% increase on its revenue over the past 12 months. Aurinia Pharmaceuticals is also expected to turn profitable, with statutory earnings of US$0.004 per share. Before this latest report, the consensus had been expecting revenues of US$216.6m and US$0.30 per share in losses. The analysts have definitely been lifting their expectations, with the company expected to reach profitability next year - sooner than expected - thanks to the modest lift to revenue expectations.

Despite these upgrades, the consensus price target fell 16% to US$11.14, perhaps signalling that the uplift in performance is not expected to last. 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. The most optimistic Aurinia Pharmaceuticals analyst has a price target of US$15.00 per share, while the most pessimistic values it at US$8.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. It's pretty clear that there is an expectation that Aurinia Pharmaceuticals' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 29% growth on an annualised basis. This is compared to a historical growth rate of 61% 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 17% annually. Even after the forecast slowdown in growth, it seems obvious that Aurinia Pharmaceuticals is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts now expect Aurinia Pharmaceuticals to become profitable next year, compared to previous expectations that it would report a loss. 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 fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Aurinia 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 Aurinia Pharmaceuticals analysts - going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Aurinia Pharmaceuticals that you need to be mindful of.

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

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.