Earnings Update: Kura Oncology, Inc. (NASDAQ:KURA) Just Reported And Analysts Are Boosting Their Estimates

It's shaping up to be a tough period for Kura Oncology, Inc. (NASDAQ:KURA), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. It was not a great statutory result, with revenues coming in 64% lower than the analysts predicted. Unsurprisingly, earnings also fell seriously short of forecasts, turning into a per-share loss of US$0.66. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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Taking into account the latest results, the most recent consensus for Kura Oncology from 13 analysts is for revenues of US$190.1m in 2025. If met, it would imply a huge 180% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 41% to US$1.25. Before this earnings announcement, the analysts had been modelling revenues of US$132.8m and losses of US$1.96 per share in 2025. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

View our latest analysis for Kura Oncology

Yet despite these upgrades, the analysts cut their price target 6.3% to US$26.25, implicitly signalling that the ongoing losses are likely to weigh negatively on Kura Oncology's valuation. 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. Currently, the most bullish analyst values Kura Oncology at US$40.00 per share, while the most bearish prices it at US$10.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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. It's clear from the latest estimates that Kura Oncology's rate of growth is expected to accelerate meaningfully, with the forecast 294% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 104% p.a. 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 18% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Kura Oncology is expected to grow much faster than its 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, they also upgraded their revenue estimates, and are forecasting them 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 Kura Oncology's future valuation.

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 Kura Oncology analysts - going out to 2027, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Kura Oncology , and understanding this should be part of your investment process.

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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.