Theravance Biopharma, Inc. (NASDAQ:TBPH) Analysts Are Reducing Their Forecasts For This Year

Today is shaping up negative for Theravance Biopharma, Inc. (NASDAQ:TBPH) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After this downgrade, Theravance Biopharma's nine analysts are now forecasting revenues of US$70m in 2021. This would be a credible 5.2% improvement in sales compared to the last 12 months. Losses are presumed to reduce, shrinking 10% from last year to US$3.88. Yet before this consensus update, the analysts had been forecasting revenues of US$136m and losses of US$2.88 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for Theravance Biopharma

There was no major change to the consensus price target of US$30.56, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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 Theravance Biopharma analyst has a price target of US$42.00 per share, while the most pessimistic values it at US$20.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Theravance Biopharma's revenue growth is expected to slow, with the forecast 7.0% annualised growth rate until the end of 2021 being well below the historical 20% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.1% annually. Even after the forecast slowdown in growth, it seems obvious that Theravance Biopharma is also expected to grow faster 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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Theravance Biopharma after the downgrade.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Theravance Biopharma's financials, such as recent substantial insider selling. For more information, you can click here to discover this and the 4 other warning signs we've identified.

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