Market forces rained on the parade of Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) shareholders today, when the covering analyst downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.
After the downgrade, the consensus from Pieris Pharmaceuticals' single analyst is for revenues of US$24m in 2022, which would reflect a chunky 13% decline in sales compared to the last year of performance. Losses are expected to be contained, narrowing 16% from last year to US$0.47. Yet prior to the latest estimates, the analyst had been forecasting revenues of US$46m and losses of US$0.41 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a serious cut to their revenue forecasts while also expecting losses per share to increase.
Check out our latest analysis for Pieris Pharmaceuticals
The consensus price target fell 13% to US$7.00, implicitly signalling that lower earnings per share are a leading indicator for Pieris Pharmaceuticals' valuation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Pieris Pharmaceuticals' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 24% by the end of 2022. This indicates a significant reduction from annual growth of 5.8% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 15% per year. It's pretty clear that Pieris Pharmaceuticals' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analyst increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from the analyst, we'd understand if readers now felt a bit wary of Pieris Pharmaceuticals.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Pieris Pharmaceuticals' business, like dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other flags we've identified.