Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) Analysts Are Cutting Their Estimates

 Shareholders in Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) had a terrible week, as shares crashed 32% to US$10.89 in the week since its latest annual results. It looks like a positive result overall, with revenues of US$46m beating forecasts by 3.6%. Statutory losses of US$1.40 per share were roughly in line with what 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Following the latest results, Aurinia Pharmaceuticals' seven analysts are now forecasting revenues of US$136.3m in 2022. This would be a major 199% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 50% to US$0.64. Before this latest report, the consensus had been expecting revenues of US$178.3m and US$0.59 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

The consensus price target fell 16% to US$27.71, 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. There are some variant perceptions on Aurinia Pharmaceuticals, with the most bullish analyst valuing it at US$34.00 and the most bearish at US$18.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Aurinia Pharmaceuticals' past performance and to peers in the same industry. It's clear from the latest estimates that Aurinia Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with the forecast 199% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 86% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 12% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Aurinia Pharmaceuticals is expected to grow much faster than its industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Aurinia Pharmaceuticals. They also downgraded their revenue estimates, although industry data suggests that Aurinia Pharmaceuticals' revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Aurinia Pharmaceuticals' future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Aurinia Pharmaceuticals. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Aurinia Pharmaceuticals analysts - going out to 2024, and you can see them free on our platform here.

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