AcelRx Pharmaceuticals, Inc. (NASDAQ:ACRX) just released its latest third-quarter report and things are not looking great. Statutory earnings fell substantially short of expectations, with revenues of US$1.4m missing forecasts by 52%. Losses exploded, with a per-share loss of US$0.10 some 21% below prior forecasts. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on AcelRx Pharmaceuticals after the latest results.
Taking into account the latest results, the current consensus from AcelRx Pharmaceuticals’ four analysts is for revenues of US$32.4m in 2021, which would reflect a huge 638% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 56% to US$0.28. Before this latest report, the consensus had been expecting revenues of US$27.6m and US$0.28 per share in losses. So there’s definitely been a change in sentiment in this update, with the analysts upgrading next year’s revenue estimates, while at the same time holding losses per share steady.
The analysts trimmed their valuations, with the average price target falling 29% to US$4.97, with the ongoing losses clearly weighing on sentiment despite the upgraded revenue estimates. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values AcelRx Pharmaceuticals at US$9.00 per share, while the most bearish prices it at US$0.84. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
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 stands out from these estimates, which is that AcelRx Pharmaceuticals is forecast to grow faster in the future than it has in the past, with revenues expected to grow many times over. If achieved, this would be a much better result than the 48% annual decline 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 6.7% per year. So it looks like AcelRx Pharmaceuticals is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn’t be too quick to come to a conclusion on AcelRx Pharmaceuticals. Long-term earnings power is much more important than next year’s profits. We have estimates – from multiple AcelRx Pharmaceuticals analysts – going out to 2024, and you can see them free on our platform here.
We don’t want to rain on the parade too much, but we did also find 3 warning signs for AcelRx Pharmaceuticals that you need to be mindful of.
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.