Last week, you might have seen that FibroGen, Inc. (NASDAQ:FGEN) released its annual result to the market. The early response was not positive, with shares down 4.9% to US$39.45 in the past week. Revenues of US$257m came in a modest 9.8% below forecasts. Statutory losses were a relative bright spot though, with a per-share loss of US$0.89 coming in a substantial 162% smaller than what analysts had expected. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. With this in mind, we’ve gathered the latest statutory forecasts to see what analysts are expecting for next year.
After the latest results, the seven analysts covering FibroGen are now predicting revenues of US$334.6m in 2020. If met, this would reflect a major 30% improvement in sales compared to the last 12 months. Per-share losses are expected to creep up to US$0.85, on a statutory basis. Before this latest report, the consensus had been expecting revenues of US$325.0m and US$0.088 per share in losses. While next year’s revenue estimates increased, there was also a large cut to EPS expectations, suggesting the consensus has a bit of a mixed view of these results.
The consensus price target stayed unchanged at US$65.86, seeming to suggest that higher forecast losses are not expected to have a long term impact on the valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values FibroGen at US$85.00 per share, while the most bearish prices it at US$46.00. This shows there is still quite a bit of diversity in estimates, but analysts don’t appear to be totally split on the stock as though it might be a success or failure situation.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. Analysts are definitely expecting FibroGen’s growth to accelerate, with the forecast 30% growth ranking favourably alongside historical growth of 13% 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 16% per year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect FibroGen to grow faster than the wider market.
The Bottom Line
Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider market. The consensus price target held steady at US$65.86, with the latest estimates not enough to have an impact on analysts’ estimated valuations.
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 FibroGen analysts – going out to 2024, and you can see them free on our platform here.
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