Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) Analysts Just Trimmed Their Revenue Forecasts By 26%

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 next year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After this downgrade, Aurinia Pharmaceuticals' eight analysts are now forecasting revenues of US$169m in 2023. This would be a huge 93% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 68% to US$0.35. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$229m and losses of US$0.33 per share in 2023. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

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The consensus price target fell 15% to US$18.19, implicitly signalling that lower earnings per share are a leading indicator for Aurinia Pharmaceuticals' valuation. 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$30.00 and the most bearish at US$13.00 per share. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Aurinia Pharmaceuticals'historical trends, as the 69% annualised revenue growth to the end of 2023 is roughly in line with the 80% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 15% annually. So it's pretty clear that Aurinia Pharmaceuticals is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Aurinia Pharmaceuticals' future valuation. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Aurinia Pharmaceuticals going forwards.

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 Aurinia Pharmaceuticals going out to 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.