FibroGen, Inc. (NASDAQ:FGEN) just released its latest yearly report and things are not looking great. Revenues missed expectations somewhat, coming in at US$148m and leading to a corresponding blowout in statutory losses. The loss per share was US$2.92, some 14% larger than the analysts forecast. 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.
After the latest results, the three analysts covering FibroGen are now predicting revenues of US$158.4m in 2024. If met, this would reflect a satisfactory 7.2% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 53% to US$1.37. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$162.3m and losses of US$1.32 per share in 2024. So it's pretty clear consensus is more negative on FibroGen after the new consensus numbers; while the analysts trimmed their revenue estimates, they also administered a moderate increase in per-share loss expectations.
The consensus price target fell 88% to US$1.25, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. Currently, the most bullish analyst values FibroGen at US$2.00 per share, while the most bearish prices it at US$0.50. 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. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that FibroGen's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 7.2% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 12% a year 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. Although FibroGen's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at FibroGen. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of FibroGen's future valuation.
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 estimates - from multiple FibroGen analysts - going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 5 warning signs for FibroGen (3 make us uncomfortable!) that you need to take into consideration.
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