Protagonist Therapeutics, Inc. (NASDAQ:PTGX) Analysts Are Reducing Their Forecasts For This Year

The latest analyst coverage could presage a bad day for Protagonist Therapeutics, Inc. (NASDAQ:PTGX), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. At US$42.47, shares are up 7.1% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the latest downgrade, the six analysts covering Protagonist Therapeutics provided consensus estimates of US$21m revenue in 2021, which would reflect a sizeable 32% decline on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$2.29 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$29m and losses of US$2.06 per share in 2021. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out our latest analysis for Protagonist Therapeutics

Analysts lifted their price target 17% to US$50.14, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value. 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. The most optimistic Protagonist Therapeutics analyst has a price target of US$60.00 per share, while the most pessimistic values it at US$41.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Protagonist Therapeutics shareholders.

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. Over the past three years, revenues have declined around 22% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 40% decline in revenue until the end of 2021. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 14% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Protagonist Therapeutics to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The increasing price target is not intuitively what we would expect to see, given these downgrades, and we'd suggest shareholders revisit their investment thesis before making a decision.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Protagonist Therapeutics 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

When trading Protagonist Therapeutics or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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