Yahoo Finance Kindred Biosciences, Inc. Just Reported Earnings, And Analysts Cut Their Target Price
One of the biggest stories of last week was how Kindred Biosciences, Inc. (NASDAQ:KIN) shares plunged 47% in the week since its latest full-year results, closing yesterday at US$4.34. The business exceeded revenue expectations with sales of US$4.3m coming in 2.3% ahead of forecasts. Statutory losses were US$1.59 a share, in line with what analysts predicted. 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 analysts' statutory forecasts suggest is in store for next year.
See our latest analysis for Kindred Biosciences
After the latest results, the six analysts covering Kindred Biosciences are now predicting revenues of US$11.2m in 2020. If met, this would reflect a major 164% improvement in sales compared to the last 12 months. Yet prior to the latest earnings, analysts had been forecasting revenues of US$10.6m and losses of US$1.47 per share in 2020. So it seems there's been a definite increase in optimism about Kindred Biosciences's future following the latest results, with a the earnings per share forecasts in particular.
Spiting the revenue upgrading, the average analyst price target fell 6.2% to US$13.92, clearly signalling that higher forecast losses are a valuation concern. 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. Currently, the most bullish analyst values Kindred Biosciences at US$25.00 per share, while the most bearish prices it at US$9.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Kindred Biosciences's performance in recent years. Analysts are definitely expecting Kindred Biosciences's growth to accelerate, with the forecast 164% growth ranking favourably alongside historical growth of 116% per annum over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% per year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect Kindred Biosciences to grow faster than the wider market.
The Bottom Line
Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Kindred Biosciences's future valuation.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Kindred Biosciences going out to 2024, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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