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The analysts might have been a bit too bullish on Prothena Corporation plc (NASDAQ:PRTA), given that the company fell short of expectations when it released its first-quarter results last week. It looks to have been a weak result overall, as revenue of US$50k were 98% less than the analysts expected. Unsurprisingly, losses were also somewhat larger than was modelled, at US$1.34 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for Prothena
Taking into account the latest results, the current consensus, from the nine analysts covering Prothena, is for revenues of US$12.6m in 2024. This implies a concerning 86% reduction in Prothena's revenue over the past 12 months. Per-share losses are expected to explode, reaching US$4.67 per share. Before this latest report, the consensus had been expecting revenues of US$13.4m and US$4.81 per share in losses. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.
There was no major change to the US$63.43average price target, suggesting that the adjustments to revenue and earnings are not expected to have a long-term impact on the business. 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 Prothena at US$94.00 per share, while the most bearish prices it at US$28.00. 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 analysts think this business will perform. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 93% by the end of 2024. This indicates a significant reduction from annual growth of 40% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 18% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Prothena is expected to lag the wider industry.