Five Prime Therapeutics, Inc. (NASDAQ:FPRX) just released its latest third-quarter report and things are not looking great. It was not a great statutory result, with revenues coming in 55% lower than the analysts predicted. Unsurprisingly, earnings also fell seriously short of forecasts, turning into a per-share loss of US$0.74. The 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following last week’s earnings report, Five Prime Therapeutics’ eight analysts are forecasting 2021 revenues to be US$17.0m, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 32% to US$1.83. Before this earnings announcement, the analysts had been modelling revenues of US$17.2m and losses of US$2.15 per share in 2021. Although the revenue estimates have not really changed Five Prime Therapeutics’future looks a little different to the past, with a the loss per share forecasts in particular.
The average price target held steady at US$8.50, seeming to indicate that business is performing in line with expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Five Prime Therapeutics analyst has a price target of US$11.00 per share, while the most pessimistic values it at US$5.00. 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. One thing that stands out from these estimates is that shrinking revenues are expected to moderate from the historical decline of 58% per annum over the past five years.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Five Prime Therapeutics’ revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn’t be too quick to come to a conclusion on Five Prime Therapeutics. Long-term earnings power is much more important than next year’s profits. We have forecasts for Five Prime Therapeutics going out to 2024, and you can see them free on our platform here.
That said, it’s still necessary to consider the ever-present spectre of investment risk. We’ve identified 3 warning signs with Five Prime Therapeutics , and understanding them should be part of your investment process.
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.