The analysts covering Theravance Biopharma, Inc. (NASDAQ:TBPH) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. 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 four analysts are now forecasting revenues of US$71m in 2024. This would be a huge 30% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 50% to US$0.61. However, before this estimates update, the consensus had been expecting revenues of US$80m and US$0.40 per share in losses. 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.
Check out our latest analysis for Theravance Biopharma
The consensus price target was broadly unchanged at US$14.50, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.
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. For example, we noticed that Theravance Biopharma's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 23% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 4.8% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 8.3% per year. So it looks like Theravance Biopharma is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Theravance Biopharma. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected next year, we wouldn't be surprised if investors were a bit wary of Theravance Biopharma.
Still, 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 Theravance Biopharma going out to 2025, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.