Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) shareholders are probably feeling a little disappointed, since its shares fell 8.3% to US$12.76 in the week after its latest quarterly results. Revenue of US$17m came in 5.2% ahead of expectations, although statutory earnings didn't fare nearly so well, recording a loss of US$1.47, a 13% miss. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the eight analysts covering Enanta Pharmaceuticals provided consensus estimates of US$69.7m revenue in 2024, which would reflect a small 4.4% decline over the past 12 months. Losses are forecast to narrow 6.9% to US$5.80 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$68.8m and losses of US$5.21 per share in 2024. So it's pretty clear the analysts have mixed opinions on Enanta Pharmaceuticals even after this update; although they reconfirmed their revenue numbers, it came at the cost of a noticeable increase in per-share losses.
As a result, there was no major change to the consensus price target of US$20.38, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. 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. There are some variant perceptions on Enanta Pharmaceuticals, with the most bullish analyst valuing it at US$35.00 and the most bearish at US$11.00 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would also point out that the forecast 8.5% annualised revenue decline to the end of 2024 is better than the historical trend, which saw revenues shrink 25% 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 18% 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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Enanta Pharmaceuticals. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Enanta Pharmaceuticals analysts - going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for Enanta Pharmaceuticals that 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.