Tarsus Pharmaceuticals, Inc. (NASDAQ:TARS) defied analyst predictions to release its full-year results, which were ahead of market expectations. Revenues of US$17m beat estimates by a substantial 80% margin. Unfortunately, Tarsus Pharmaceuticals also reported a statutory loss of US$4.62 per share, which at least was smaller than the analysts expected. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Tarsus Pharmaceuticals' five analysts is for revenues of US$96.6m in 2024. This would reflect a major 454% increase on its revenue over the past 12 months. Losses are expected to increase substantially, hitting US$4.55 per share. Before this latest report, the consensus had been expecting revenues of US$62.3m and US$5.04 per share in losses. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.
The consensus price target rose 11% to US$49.38, with the analysts encouraged by the higher revenue and lower forecast losses for next year. 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. Currently, the most bullish analyst values Tarsus Pharmaceuticals at US$65.00 per share, while the most bearish prices it at US$30.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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. The analysts are definitely expecting Tarsus Pharmaceuticals' growth to accelerate, with the forecast 5x annualised growth to the end of 2024 ranking favourably alongside historical growth of 23% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.0% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Tarsus Pharmaceuticals to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Tarsus Pharmaceuticals. Long-term earnings power is much more important than next year's profits. We have forecasts for Tarsus Pharmaceuticals going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example - Tarsus Pharmaceuticals has 1 warning sign we think you should be aware of.
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