Things Look Grim For Theravance Biopharma, Inc. (NASDAQ:TBPH) After Today's Downgrade

The latest analyst coverage could presage a bad day for Theravance Biopharma, Inc. (NASDAQ:TBPH), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. Investors however, have been notably more optimistic about Theravance Biopharma recently, with the stock price up an impressive 12% to US$10.22 in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

Following the downgrade, the most recent consensus for Theravance Biopharma from its seven analysts is for revenues of US$55m in 2022 which, if met, would be an okay 5.7% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 25% to US$0.99. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$97m and losses of US$0.65 per share in 2022. 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

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Theravance Biopharma's revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2022 being well below the historical 15% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.6% per year. 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 wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on Theravance Biopharma, and their negativity could be grounds for caution.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Theravance Biopharma's business, like dilutive stock issuance over the past year. Learn more, and discover the 3 other flags we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.