The latest analyst coverage could presage a bad day for Albireo Pharma, Inc. (NASDAQ:ALBO), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the downgrade, the consensus from six analysts covering Albireo Pharma is for revenues of US$33m in 2022, implying a stressful 35% decline in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$7.92 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$44m and losses of US$6.75 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
See our latest analysis for Albireo Pharma
The consensus price target fell 20% to US$52.83, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. The most optimistic Albireo Pharma analyst has a price target of US$68.00 per share, while the most pessimistic values it at US$40.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 57% by the end of 2022. This indicates a significant reduction from annual growth of 46% 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 16% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Albireo Pharma is expected to lag the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Albireo Pharma. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Albireo Pharma's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Albireo Pharma.