Earnings Release: Here's Why Analysts Cut Their Aytu BioPharma, Inc. (NASDAQ:AYTU) Price Target To US$8.00

It's been a pretty great week for Aytu BioPharma, Inc. (NASDAQ:AYTU) shareholders, with its shares surging 18% to US$0.55 in the week since its latest quarterly results. Revenues were in line with expectations, at US$24m, while statutory losses ballooned to US$1.79 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Aytu BioPharma

Taking into account the latest results, the most recent consensus for Aytu BioPharma from two analysts is for revenues of US$107.6m in 2023 which, if met, would be a solid 16% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 74% to US$0.76. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$107.2m and losses of US$0.82 per share in 2023. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for next year.

The consensus price target fell 27% to US$8.00despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on valuations.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Aytu BioPharma's revenue growth is expected to slow, with the forecast 13% annualised growth rate until the end of 2023 being well below the historical 65% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.0% annually. Even after the forecast slowdown in growth, it seems obvious that Aytu BioPharma is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still 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 Aytu BioPharma's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Aytu BioPharma. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Aytu BioPharma going out as far as 2024, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 5 warning signs for Aytu BioPharma you should be aware of, and 2 of them don't sit too well with us.

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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.