aTyr Pharma, Inc. (NASDAQ:LIFE) investors will be delighted, with the company turning in some strong numbers with its latest results. Revenues of US$10m beat estimates by a substantial 23% margin. Unfortunately, aTyr Pharma also reported a statutory loss of US$1.77 per share, which at least was smaller than the analysts expected. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. We’ve gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the consensus from aTyr Pharma’s three analysts is for revenues of US$7.67m in 2021, which would reflect a substantial 27% decline in sales compared to the last year of performance. Per-share losses are predicted to creep up to US$1.90. Before this latest report, the consensus had been expecting revenues of US$9.72m and US$3.01 per share in losses. We can see there’s definitely been a change in sentiment in this update, with the analysts administering a meaningful downgrade to next year’s revenue estimates, while at the same time reducing their loss estimates.
There was a decent 18% increase in the price target to US$17.67, with the analysts clearly signalling that the expected reduction in losses is a positive, despite a weaker revenue outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values aTyr Pharma at US$26.00 per share, while the most bearish prices it at US$13.00. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the aTyr Pharma’s 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 27% by the end of 2021. This indicates a significant reduction from annual growth of 1,947% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 17% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – aTyr Pharma is expected to lag the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Still, earnings per share are more important to value creation for shareholders. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. We have forecasts for aTyr Pharma going out to 2025, and you can see them free on our platform here.
And what about risks? Every company has them, and we’ve spotted 5 warning signs for aTyr Pharma (of which 2 are a bit unpleasant!) you should know about.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.