Royalty Pharma plc (NASDAQ:RPRX) First-Quarter Results: Here's What Analysts Are Forecasting For This Year

Royalty Pharma plc (NASDAQ:RPRX) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues were US$568m, and Royalty Pharma was a dismal 20% short of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Royalty Pharma after the latest results.

View our latest analysis for Royalty Pharma

Following the latest results, Royalty Pharma's six analysts are now forecasting revenues of US$2.69b in 2024. This would be a major 20% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to expand 14% to US$2.02. In the lead-up to this report, the analysts had been modelling revenues of US$2.66b and earnings per share (EPS) of US$2.34 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.

The consensus price target held steady at US$45.75, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Royalty Pharma, with the most bullish analyst valuing it at US$60.00 and the most bearish at US$37.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. The analysts are definitely expecting Royalty Pharma's growth to accelerate, with the forecast 28% annualised growth to the end of 2024 ranking favourably alongside historical growth of 1.3% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.3% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Royalty Pharma to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Royalty Pharma. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$45.75, with the latest estimates not enough to have an impact on their price targets.

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 Royalty Pharma going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with Royalty Pharma .

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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.