Stock Analysis

Need To Know: Analysts Are Much More Bullish On Liquidia Corporation (NASDAQ:LQDA) Revenues

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Shareholders in Liquidia Corporation (NASDAQ:LQDA) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. The market may be pricing in some blue sky too, with the share price gaining 17% to US$7.22 in the last 7 days. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

Following the upgrade, the current consensus from Liquidia's six analysts is for revenues of US$17m in 2023 which - if met - would reflect a solid 8.8% increase on its sales over the past 12 months. Per-share losses are expected to see a sharp uptick, reaching US$0.72. However, before this estimates update, the consensus had been expecting revenues of US$15m and US$0.72 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analysts noticeably increasing their revenue forecasts while also expecting losses per share to hold steady.

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NasdaqCM:LQDA Earnings and Revenue Growth March 18th 2023

The consensus price target held steady at US$14.29 despite the upgrade to revenue forecasts and ongoing losses. Analysts seem to think the business is otherwise performing roughly in line with expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Liquidia, with the most bullish analyst valuing it at US$20.00 and the most bearish at US$3.00 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Liquidia's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 8.8% growth on an annualised basis. This is compared to a historical growth rate of 24% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.1% per year. So it's pretty clear that, while Liquidia's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Liquidia is moving incrementally towards profitability. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Liquidia.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Liquidia analysts - going out to 2025, 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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