Yahoo Finance Need To Know: Analysts Just Made A Substantial Cut To Their Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) Estimates
Today is shaping up negative for Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.
Following the downgrade, the most recent consensus for Enanta Pharmaceuticals from its eight analysts is for revenues of US$151m in 2023 which, if met, would be a major 68% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 32% to US$3.91. Prior to this update, the analysts had been forecasting revenues of US$275m and earnings per share (EPS) of US$2.17 in 2023. So we can see that the consensus has become notably more bearish on Enanta Pharmaceuticals' outlook with these numbers, making a pretty serious reduction to next year's revenue estimates. Furthermore, they expect the business to be loss-making next year, compared to their previous forecasts of a profit.
See our latest analysis for Enanta Pharmaceuticals
Analysts lifted their price target 5.9% to US$77.67, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Enanta Pharmaceuticals, with the most bullish analyst valuing it at US$137 and the most bearish at US$50.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that Enanta Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 52% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 9.7% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 15% per year. Not only are Enanta Pharmaceuticals' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Enanta Pharmaceuticals dropped from profits to a loss next year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The increasing price target is not intuitively what we would expect to see, given these downgrades, and we'd suggest shareholders revisit their investment thesis before making a decision.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Enanta Pharmaceuticals 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.
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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.
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