Heron Therapeutics, Inc. Beat Analyst Profit Forecasts, And Analysts Have New Estimates

Shareholders might have noticed that Heron Therapeutics, Inc. (NASDAQ:HRTX) filed its quarterly result this time last week. The early response was not positive, with shares down 7.7% to US$2.17 in the past week. Heron Therapeutics beat expectations by 4.0% with revenues of US$39m. It also surprised on the earnings front, with an unexpected statutory profit of US$0.01 per share a nice improvement on the losses that the analysts forecast. 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.

We've discovered 2 warning signs about Heron Therapeutics. View them for free.

Following the latest results, Heron Therapeutics' three analysts are now forecasting revenues of US$159.3m in 2025. This would be a modest 7.2% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 48% to US$0.027. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$157.3m and losses of US$0.017 per share in 2025. So it's pretty clear the analysts have mixed opinions on Heron Therapeutics even after this update; although they reconfirmed their revenue numbers, it came at the cost of a massive increase in per-share losses.

View our latest analysis for Heron Therapeutics

Despite expectations of heavier losses next year,the analysts have lifted their price target 5.6% to US$6.33, perhaps implying these losses are not expected to be recurring over the long term. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Heron Therapeutics analyst has a price target of US$9.00 per share, while the most pessimistic values it at US$4.00. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Heron Therapeutics' past performance and to peers in the same industry. It's clear from the latest estimates that Heron Therapeutics' rate of growth is expected to accelerate meaningfully, with the forecast 9.8% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 7.7% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 17% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Heron Therapeutics is expected to grow slower than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Heron Therapeutics analysts - going out to 2027, and you can see them free on our platform here.

Even so, be aware that Heron Therapeutics is showing 2 warning signs in our investment analysis , and 1 of those is a bit unpleasant...

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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.