Idorsia Ltd (VTX:IDIA) Just Reported And Analysts Have Been Cutting Their Estimates
Idorsia Ltd (VTX:IDIA) just released its annual report and things are looking bullish. Revenues of CHF97m beat estimates by a substantial 22% margin. Unfortunately, Idorsia also reported a statutory loss of CHF4.67 per share, which at least was smaller than the analysts expected. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Idorsia
Following the latest results, Idorsia's ten analysts are now forecasting revenues of CHF205.4m in 2023. This would be a huge 112% improvement in sales compared to the last 12 months. Losses are supposed to decline, shrinking 12% from last year to CHF3.90. Yet prior to the latest earnings, the analysts had been forecasting revenues of CHF236.2m and losses of CHF3.71 per share in 2023. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.
There was no major change to the consensus price target of CHF16.85, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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. The most optimistic Idorsia analyst has a price target of CHF36.00 per share, while the most pessimistic values it at CHF10.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we noticed that Idorsia's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 112% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 30% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 21% annually. So it looks like Idorsia is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Idorsia. They also downgraded their revenue estimates, although industry data suggests that Idorsia's revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 Idorsia going out to 2025, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 5 warning signs for Idorsia (3 shouldn't be ignored!) that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
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