UK Markets close in 38 mins
  • FTSE 100

    7,540.93
    +4.87 (+0.06%)
     
  • FTSE 250

    20,355.91
    +19.50 (+0.10%)
     
  • AIM

    931.40
    -0.14 (-0.02%)
     
  • GBP/EUR

    1.1900
    +0.0011 (+0.09%)
     
  • GBP/USD

    1.2096
    +0.0001 (+0.0109%)
     
  • BTC-GBP

    19,417.46
    -388.30 (-1.96%)
     
  • CMC Crypto 200

    555.08
    -17.74 (-3.10%)
     
  • S&P 500

    4,268.47
    -36.73 (-0.85%)
     
  • DOW

    33,947.10
    -204.91 (-0.60%)
     
  • CRUDE OIL

    86.64
    +0.11 (+0.13%)
     
  • GOLD FUTURES

    1,788.70
    -1.00 (-0.06%)
     
  • NIKKEI 225

    29,222.77
    +353.86 (+1.23%)
     
  • HANG SENG

    19,926.24
    +95.72 (+0.48%)
     
  • DAX

    13,901.81
    -8.31 (-0.06%)
     
  • CAC 40

    6,591.95
    -0.63 (-0.01%)
     

These Analysts Just Made A Massive Downgrade To Their Prothena Corporation plc (NASDAQ:PRTA) EPS Forecasts

  • Oops!
    Something went wrong.
    Please try again later.
·3-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Today is shaping up negative for Prothena Corporation plc (NASDAQ:PRTA) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the latest downgrade, the five analysts covering Prothena provided consensus estimates of US$41m revenue in 2022, which would reflect a concerning 80% decline on its sales over the past 12 months. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of US$3.07 per share in 2022. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$64m and losses of US$2.35 per share in 2022. 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 Prothena

earnings-and-revenue-growth
earnings-and-revenue-growth

The consensus price target fell 7.2% to US$70.14, implicitly signalling that lower earnings per share are a leading indicator for Prothena's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Prothena analyst has a price target of US$100.00 per share, while the most pessimistic values it at US$45.00. 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.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 88% by the end of 2022. This indicates a significant reduction from annual growth of 70% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 12% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Prothena is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Prothena.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Prothena analysts - going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting