US$8.00 - That's What Analysts Think Strongbridge Biopharma plc (NASDAQ:SBBP) Is Worth After These Results

It's been a sad week for Strongbridge Biopharma plc (NASDAQ:SBBP), who've watched their investment drop 14% to US$2.77 in the week since the company reported its yearly result. The statutory results were mixed overall, with revenues of US$31m in line with analyst forecasts, but losses of US$0.78 per share, some 7.8% larger than the analysts were predicting. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Strongbridge Biopharma after the latest results.

Check out our latest analysis for Strongbridge Biopharma

Taking into account the latest results, the current consensus from Strongbridge Biopharma's six analysts is for revenues of US$35.8m in 2021, which would reflect a meaningful 17% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 41% to US$0.46. Before this earnings announcement, the analysts had been modelling revenues of US$35.5m and losses of US$0.60 per share in 2021. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading revenues and making a very promising decrease in losses per share in particular.

These new estimates led to the consensus price target rising 5.3% to US$8.00, with lower forecast losses suggesting things could be looking up for Strongbridge Biopharma. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Strongbridge Biopharma at US$10.00 per share, while the most bearish prices it at US$5.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Strongbridge Biopharma's revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 17% growth on an annualised basis. This is compared to a historical growth rate of 34% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.8% per year. Even after the forecast slowdown in growth, it seems obvious that Strongbridge Biopharma is also expected to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 estimates - from multiple Strongbridge Biopharma analysts - going out to 2025, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for Strongbridge Biopharma that you should be aware of.

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