Time To Worry? Analysts Are Downgrading Their Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) Outlook

The analysts covering Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. At US$58.53, shares are up 4.4% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following this downgrade, Enanta Pharmaceuticals' ten analysts are forecasting 2022 revenues to be US$97m, approximately in line with the last 12 months. Per-share losses are expected to explode, reaching US$4.97 per share. However, before this estimates update, the consensus had been expecting revenues of US$109m and US$4.26 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Enanta Pharmaceuticals

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 0.03% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 5.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 13% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Enanta Pharmaceuticals is expected to lag 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. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Enanta Pharmaceuticals' revenues are expected to grow slower than the wider market. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on Enanta Pharmaceuticals, and their negativity could be grounds for caution.

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 Enanta Pharmaceuticals analysts - 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.