Yahoo Finance Some Karyopharm Therapeutics Inc. (NASDAQ:KPTI) Analysts Just Made A Major Cut To Next Year's Estimates
The analysts covering Karyopharm Therapeutics Inc. (NASDAQ:KPTI) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.
Following the downgrade, the latest consensus from Karyopharm Therapeutics' nine analysts is for revenues of US$127m in 2021, which would reflect a solid 13% improvement in sales compared to the last 12 months. Losses are expected to increase slightly, to US$2.79 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$157m and losses of US$2.30 per share in 2021. 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.
See our latest analysis for Karyopharm Therapeutics
The consensus price target fell 15% to US$24.70, implicitly signalling that lower earnings per share are a leading indicator for Karyopharm Therapeutics' 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. Currently, the most bullish analyst values Karyopharm Therapeutics at US$49.00 per share, while the most bearish prices it at US$11.00. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily on 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. It's pretty clear that there is an expectation that Karyopharm Therapeutics' revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 17% growth on an annualised basis. This is compared to a historical growth rate of 68% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 14% annually. Factoring in the forecast slowdown in growth, it looks like Karyopharm Therapeutics is forecast to grow at about the same rate as 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. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Karyopharm Therapeutics' business, like dilutive stock issuance over the past year. Learn more, and discover the 4 other risks we've identified, for 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.
This article by Simply Wall St is general in nature. 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.
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