Analysts Are Upgrading Verona Pharma plc (NASDAQ:VRNA) After Its Latest Results

Investors in Verona Pharma plc (NASDAQ:VRNA) had a good week, as its shares rose 2.5% to close at US$69.63 following the release of its full-year results. Revenues of US$42m beat expectations by a respectable 8.9%, although statutory losses per share increased. Verona Pharma lost US$2.16, which was 91% more than what the analysts had included in their models. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Verona Pharma

Taking into account the latest results, the consensus forecast from Verona Pharma's eight analysts is for revenues of US$308.2m in 2025. This reflects a sizeable 629% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Verona Pharma forecast to report a statutory profit of US$0.14 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$264.5m and losses of US$0.029 per share in 2025. It looks like there's been a definite improvement in business conditions, with a revenue upgrade expected to lead to profitability sooner than previously forecast.

It will come as no surprise to learn that the analysts have increased their price target for Verona Pharma 17% to US$81.25on the back of these upgrades. 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. There are some variant perceptions on Verona Pharma, with the most bullish analyst valuing it at US$93.00 and the most bearish at US$72.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Verona Pharma's growth to accelerate, with the forecast 6x annualised growth to the end of 2025 ranking favourably alongside historical growth of 12% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.5% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Verona Pharma is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that there's been a clear step-change in belief around the business' prospects, with the analysts now expecting Verona Pharma to become profitable next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 Verona Pharma going out to 2027, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with Verona 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.