RedHill Biopharma Ltd. (NASDAQ:RDHL) Just Reported, And Analysts Assigned A US$15.79 Price Target

Shareholders might have noticed that RedHill Biopharma Ltd. (NASDAQ:RDHL) filed its quarterly result this time last week. The early response was not positive, with shares down 4.6% to US$2.72 in the past week. Results look to have been somewhat negative - revenue fell 7.7% short of analyst estimates at US$22m, although statutory losses were somewhat better. The per-share loss was US$0.05, 77% smaller than the analysts were expecting prior to the result. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for RedHill Biopharma

Taking into account the latest results, the consensus forecast from RedHill Biopharma's seven analysts is for revenues of US$140.9m in 2022, which would reflect a major 66% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 74% to US$0.48. Before this earnings announcement, the analysts had been modelling revenues of US$144.5m and losses of US$0.43 per share in 2022. So it's pretty clear the analysts have mixed opinions on RedHill Biopharma after this update; revenues were downgraded and per-share losses expected to increase.

The average price target fell 16% to US$15.79, implicitly signalling that lower earnings per share are a leading indicator for RedHill Biopharma's 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. Currently, the most bullish analyst values RedHill Biopharma at US$26.00 per share, while the most bearish prices it at US$11.50. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the RedHill Biopharma's past performance and to peers in the same industry. It's pretty clear that there is an expectation that RedHill Biopharma's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 50% growth on an annualised basis. This is compared to a historical growth rate of 77% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.3% annually. So it's pretty clear that, while RedHill Biopharma's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at RedHill Biopharma. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of RedHill Biopharma's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for RedHill Biopharma going out to 2023, and you can see them free on our platform here.

Before you take the next step you should know about the 2 warning signs for RedHill Biopharma that we have uncovered.

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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.