Earnings Update: Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) Just Reported And Analysts Are Boosting Their Estimates

Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) investors will be delighted, with the company turning in some strong numbers with its latest results. Results overall were solid, with revenues arriving 6.6% better than analyst forecasts at US$1.3m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.07 per share, were 6.6% smaller than the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

Taking into account the latest results, the five analysts covering Lexicon Pharmaceuticals provided consensus estimates of US$13.8m revenue in 2025, which would reflect a painful 56% decline over the past 12 months. Losses are predicted to fall substantially, shrinking 33% to US$0.33. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$9.34m and losses of US$0.37 per share in 2025. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

See our latest analysis for Lexicon Pharmaceuticals

There was no major change to the consensus price target of US$2.58, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Lexicon Pharmaceuticals, with the most bullish analyst valuing it at US$6.00 and the most bearish at US$0.70 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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. One thing that stands out from these estimates is that revenues are expected to keep falling until the end of 2025, roughly in line with the historical decline of 82% per annum over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 17% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Lexicon Pharmaceuticals to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Lexicon Pharmaceuticals. Long-term earnings power is much more important than next year's profits. We have forecasts for Lexicon Pharmaceuticals going out to 2027, and you can see them free on our platform here.

You still need to take note of risks, for example - Lexicon Pharmaceuticals has 3 warning signs (and 2 which are a bit concerning) we think you should know about.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.