Shareholders will be ecstatic, with their stake up 34% over the past week following Arrowhead Pharmaceuticals, Inc.'s (NASDAQ:ARWR) latest annual results. It looks like the results were a bit of a negative overall. While revenues of US$169m were in line with analyst predictions, earnings were less than expected, missing estimates by 6.0% to hit US$0.69 per share. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest forecasts to see whether analysts have changed their mind on Arrowhead Pharmaceuticals after the latest results.
Taking into account the latest results, the current consensus, from the six analysts covering Arrowhead Pharmaceuticals, is for revenues of US$94.6m in 2020, which would reflect a sizeable 44% reduction in Arrowhead Pharmaceuticals's sales over the past 12 months. The company is expected to report a loss of US$0.49 in 2020, a sharp decline from a profit over the last year. Before this earnings announcement, analysts had been forecasting revenues of US$77.9m and losses of US$0.36 per share in 2020. Although sales sentiment looks to be improving, analysts have made a large cut to per-share earnings estimates, showing a sharp increase in pessimism after earnings.
It will come as a surprise to learn that the consensus price target rose 26% to US$56.86, with analysts clearly more interested in growing revenue, even as losses intensify. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Arrowhead Pharmaceuticals at US$72.00 per share, while the most bearish prices it at US$36.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Arrowhead Pharmaceuticals's past performance and to peers in the same market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 44% a significant reduction from annual growth of 80% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 18% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Arrowhead Pharmaceuticals to grow slower than the wider market.
The Bottom Line
They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Arrowhead Pharmaceuticals going out to 2024, and you can see them free on our platform here.
We also provide an overview of the Arrowhead Pharmaceuticals Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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