Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) defied analyst predictions to release its quarterly results, which were ahead of market expectations. Results clearly exceeded expectations, with a substantial revenue beat leading to smaller losses in what looks like a definite win for investors. Revenues were US$81m and the statutory loss per share was US$1.13, smaller than the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the 13 analysts covering Ultragenyx Pharmaceutical are now predicting revenues of US$319.7m in 2021. If met, this would reflect a major 49% improvement in sales compared to the last 12 months. Losses are expected to increase slightly, to US$4.49 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$325.6m and losses of US$4.56 per share in 2021.
The average price target fell 14% to US$102, with the ongoing losses seemingly a concern for the analysts, despite the lack of real change to the earnings forecasts. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Ultragenyx Pharmaceutical, with the most bullish analyst valuing it at US$128 and the most bearish at US$64.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for 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. We would highlight that Ultragenyx Pharmaceutical's revenue growth is expected to slow, with forecast 49% increase next year well below the historical 86%p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 21% next year. Even after the forecast slowdown in growth, it seems obvious that Ultragenyx Pharmaceutical is also expected to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Ultragenyx Pharmaceutical 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 Ultragenyx Pharmaceutical 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.
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