As you might know, Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) last week released its latest quarterly, and things did not turn out so great for shareholders. Unfortunately, Enanta Pharmaceuticals delivered a serious earnings miss. Revenues of US$18m were 18% below expectations, and statutory losses ballooned 29% to US$1.58 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus, from the eight analysts covering Enanta Pharmaceuticals, is for revenues of US$68.8m in 2024. This implies a perceptible 6.5% reduction in Enanta Pharmaceuticals' revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 21% to US$5.17. Before this latest report, the consensus had been expecting revenues of US$72.5m and US$4.86 per share in losses. Overall it looks as though the analysts are negative in this update. Although revenue forecasts held steady, the consensus also made a moderate increase in to its losses per share forecasts.
The average price target fell 13% to US$20.88, implicitly signalling that lower earnings per share are a leading indicator for Enanta Pharmaceuticals' valuation. 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 Enanta Pharmaceuticals analyst has a price target of US$35.00 per share, while the most pessimistic values it at US$11.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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. We would also point out that the forecast 8.6% annualised revenue decline to the end of 2024 is better than the historical trend, which saw revenues shrink 26% annually over the past five years By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 17% per year. So while a broad number of companies are forecast to grow, unfortunately Enanta Pharmaceuticals is expected to see its revenue affected worse than other companies in the industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Enanta Pharmaceuticals' future valuation.
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. At Simply Wall St, we have a full range of analyst estimates for Enanta Pharmaceuticals going out to 2026, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 2 warning signs for Enanta Pharmaceuticals you should be aware of.
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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.