Xenon Pharmaceuticals Inc. (NASDAQ:XENE) just released its latest quarterly results and things are looking bullish. The results were impressive, with revenues of US$7.1m exceeding analyst forecasts by 57%, and statutory losses of US$0.22 were likewise much smaller than the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the six analysts covering Xenon Pharmaceuticals are now predicting revenues of US$29.8m in 2020. If met, this would reflect a major 114% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 25% to US$0.98. Before this earnings announcement, the analysts had been modelling revenues of US$20.0m and losses of US$1.39 per share in 2020. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.
There was no major change to the consensus price target of US$22.67, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Xenon Pharmaceuticals at US$25.00 per share, while the most bearish prices it at US$16.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Xenon Pharmaceuticals' past performance and to peers in the same industry. For example, we noticed that Xenon Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 114%, well above its historical decline of 42% a year 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 24% per year. Not only are Xenon Pharmaceuticals' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at US$22.67, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Xenon Pharmaceuticals going out to 2024, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Xenon Pharmaceuticals that you should be aware of.
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