The analysts covering Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
Following the downgrade, the most recent consensus for Aurinia Pharmaceuticals from its seven analysts is for revenues of US$139m in 2022 which, if met, would be a substantial 205% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 49% to US$0.65. However, before this estimates update, the consensus had been expecting revenues of US$138m and US$0.63 per share in losses. So it's pretty clear consensus is mixed on Aurinia Pharmaceuticals after the new consensus numbers; while the analysts held their revenue numbers steady, they also administered a moderate increase in per-share loss expectations.
With the increase in forecast losses for this year, it's perhaps no surprise to see that The consensus price target dipped 8.0% to US$27.21, with the analysts signalling that growing losses would be a definite concern. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Aurinia Pharmaceuticals, with the most bullish analyst valuing it at US$34.00 and the most bearish at US$18.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. The analysts are definitely expecting Aurinia Pharmaceuticals' growth to accelerate, with the forecast 205% annualised growth to the end of 2022 ranking favourably alongside historical growth of 86% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 12% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Aurinia Pharmaceuticals to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Aurinia Pharmaceuticals' revenues are expected to perform better than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
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 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.
What are the risks and opportunities for Aurinia Pharmaceuticals?
Trading at 82.5% below our estimate of its fair value
Revenue is forecast to grow 28.58% per year
Shareholders have been diluted in the past year
Volatile share price over the past 3 months
Currently unprofitable and not forecast to become profitable over the next 3 years
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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.
Aurinia Pharmaceuticals Inc., a commercial-stage biopharmaceutical company, focuses on developing and commercializing therapies to treat various diseases with unmet medical need in the United States and internationally.
Excellent balance sheet and fair value.