Nektar Therapeutics (NASDAQ:NKTR) Consensus Forecasts Have Become A Little Darker Since Its Latest Report

It's shaping up to be a tough period for Nektar Therapeutics (NASDAQ:NKTR), which a week ago released some disappointing first-quarter results that could have a notable impact on how the market views the stock. Statutory earnings fell substantially short of expectations, with revenues of US$10m missing forecasts by 32%. Losses exploded, with a per-share loss of US$0.24 some 44% below prior forecasts. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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Taking into account the latest results, the current consensus, from the eight analysts covering Nektar Therapeutics, is for revenues of US$50.3m in 2025. This implies a concerning 42% reduction in Nektar Therapeutics' revenue over the past 12 months. The loss per share is expected to ameliorate slightly, reducing to US$0.67. Before this earnings announcement, the analysts had been modelling revenues of US$63.8m and losses of US$0.66 per share in 2025. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

Check out our latest analysis for Nektar Therapeutics

The average price target was broadly unchanged at US$4.92, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Nektar Therapeutics, with the most bullish analyst valuing it at US$7.00 and the most bearish at US$2.00 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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. Over the past five years, revenues have declined around 12% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 52% decline in revenue until the end of 2025. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 8.3% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Nektar Therapeutics to suffer worse than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Nektar Therapeutics. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Nektar Therapeutics going out to 2027, and you can see them free on our platform here.

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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.