Shareholders in Nabriva Therapeutics plc (NASDAQ:NBRV) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.
After the upgrade, the three analysts covering Nabriva Therapeutics are now predicting revenues of US$30m in 2021. If met, this would reflect a substantial 104% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 52% to US$1.11. However, before this estimates update, the consensus had been expecting revenues of US$25m and US$1.29 per share in losses. 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.
Yet despite these upgrades, the analysts cut their price target 27% to US$2.68, implicitly signalling that the ongoing losses are likely to weigh negatively on Nabriva Therapeutics' 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. The most optimistic Nabriva Therapeutics analyst has a price target of US$4.00 per share, while the most pessimistic values it at US$1.35. 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Nabriva Therapeutics' growth to accelerate, with the forecast 3x annualised growth to the end of 2021 ranking favourably alongside historical growth of 5.8% 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 3.5% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Nabriva Therapeutics is expected to grow much faster than its industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Nabriva Therapeutics 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. A lower price target is not intuitively what we would expect from a company whose business prospects are improving - at least judging by these forecasts - but if the underlying fundamentals are strong, Nabriva Therapeutics could be one for the watch list.
Analysts are definitely bullish on Nabriva Therapeutics, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including major dilution from new stock issuance in the past year. For more information, you can click through to our platform to learn more about this and the 2 other risks we've identified .
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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What are the risks and opportunities for Nabriva Therapeutics?
Earnings are forecast to grow 60.18% per year
Earnings have grown 12.8% per year over the past 5 years
Has less than 1 year of cash runway
Does not have a meaningful market cap ($5M)
Shareholders have been diluted in the past year
Volatile share price over the past 3 months
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.
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