There's been a notable change in appetite for Baudax Bio, Inc. (NASDAQ:BXRX) shares in the week since its quarterly report, with the stock down 13% to US$1.00. It was a shocking result from a sales perspective, with revenues falling 93% short of analyst expectations. There was one bright spot though, with Baudax Bio reporting a surprise (statutory) profit of US$0.62, defying analyst expectations of a loss. 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.
Taking into account the latest results, the current consensus from Baudax Bio's three analysts is for revenues of US$21.7m in 2021, which would reflect a substantial 5,104% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 80% to US$0.95. Before this latest report, the consensus had been expecting revenues of US$24.8m and US$1.41 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.
The consensus price target fell 6.9% to US$9.00, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Baudax Bio, with the most bullish analyst valuing it at US$11.00 and the most bearish at US$7.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Baudax Bio shareholders.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. They also downgraded their revenue estimates, although industry data suggests that Baudax Bio's revenues are expected to grow faster than the wider industry. With that said, earnings are more important to the long-term value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Baudax Bio's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Baudax Bio. Long-term earnings power is much more important than next year's profits. We have forecasts for Baudax Bio going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example - Baudax Bio has 4 warning signs (and 2 which are potentially serious) we think 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.
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