The investors in AVEO Pharmaceuticals, Inc.'s (NASDAQ:AVEO) will be rubbing their hands together with glee today, after the share price leapt 39% to US$5.26 in the week following its yearly results. The results look positive overall; while revenues of US$42m were in line with analyst predictions, statutory losses were 4.5% smaller than expected, with AVEO Pharmaceuticals losing US$1.63 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following the latest results, AVEO Pharmaceuticals' three analysts are now forecasting revenues of US$112.4m in 2022. This would be a sizeable 166% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 35% to US$1.01. Before this earnings announcement, the analysts had been modelling revenues of US$102.4m and losses of US$0.82 per share in 2022. While this year's revenue estimates increased, there was also a considerable increase to loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
There was no major change to the consensus price target of US$16.67, with growing revenues seemingly enough to offset the concern of growing losses. 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 AVEO Pharmaceuticals, with the most bullish analyst valuing it at US$19.00 and the most bearish at US$14.00 per share. This is a very narrow spread of estimates, implying either that AVEO Pharmaceuticals is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting AVEO Pharmaceuticals' growth to accelerate, with the forecast 166% annualised growth to the end of 2022 ranking favourably alongside historical growth of 35% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that AVEO Pharmaceuticals is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. 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 held steady at US$16.67, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple AVEO Pharmaceuticals analysts - going out to 2024, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with AVEO Pharmaceuticals .
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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.