There's been a major selloff in Portola Pharmaceuticals, Inc. (NASDAQ:PTLA) shares in the week since it released its annual report, with the stock down 25% to US$10.17. The results look positive overall; while revenues of US$117m were in line with analyst predictions, statutory losses were 9.9% smaller than expected, with Portola Pharmaceuticals losing US$4.06 per share. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Portola Pharmaceuticals after the latest results.
After the latest results, the six analysts covering Portola Pharmaceuticals are now predicting revenues of US$173.9m in 2020. If met, this would reflect a major 49% improvement in sales compared to the last 12 months. Statutory losses are forecast to balloon 27% to US$2.95 per share. Before this earnings announcement, analysts had been forecasting revenues of US$195.0m and losses of US$3.23 per share in 2020. So there's been quite a change-up of views after the latest results, with analysts making a serious cut to their revenue forecasts while also granting a small lift in to the earnings per share numbers.
Analysts have cut their price target 11% to US$20.83 per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Portola Pharmaceuticals analyst has a price target of US$31.00 per share, while the most pessimistic values it at US$16.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Portola Pharmaceuticals's performance in recent years. Next year brings more of the same, according to analysts, with revenue forecast to grow 49%, in line with its 44% annual growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 16% next year. So it's pretty clear that Portola Pharmaceuticals is forecast to grow substantially faster than its market.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. Still, earnings per share are more important to value creation for shareholders. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Portola Pharmaceuticals. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Portola Pharmaceuticals analysts - going out to 2024, and you can see them free on our platform here.
We also provide an overview of the Portola Pharmaceuticals Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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