Earnings Release: Here's Why Analysts Cut Their MEI Pharma, Inc. (NASDAQ:MEIP) Price Target To US$9.50

NASDAQ:MEIP), which a week ago released some disappointing full-year results that could have a notable impact on how the market views the stock. It was not a great statutory result, with revenues coming in 26% lower than the analysts predicted. Unsurprisingly, earnings also fell seriously short of forecasts, turning into a per-share loss of US$0.51. 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. With this in mind, we’ve gathered the latest statutory forecasts to see what the analysts are expecting for next year.” data-reactid=”28″>It’s shaping up to be a tough period for MEI Pharma, Inc. (NASDAQ:MEIP), which a week ago released some disappointing full-year results that could have a notable impact on how the market views the stock. It was not a great statutory result, with revenues coming in 26% lower than the analysts predicted. Unsurprisingly, earnings also fell seriously short of forecasts, turning into a per-share loss of US$0.51. 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. With this in mind, we’ve gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for MEI Pharma ” data-reactid=”29″> See our latest analysis for MEI Pharma

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Taking into account the latest results, the six analysts covering MEI Pharma provided consensus estimates of US$11.5m revenue in 2021, which would reflect a substantial 60% decline on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 35% to US$0.33. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$18.6m and losses of US$0.39 per share in 2021. 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 5.7% to US$9.50, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic MEI Pharma analyst has a price target of US$13.00 per share, while the most pessimistic values it at US$5.50. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the MEI Pharma’s past performance and to peers in the same industry. One more thing stood out to us about these estimates, and it’s the idea that MEI Pharma’sdecline is expected to accelerate, with revenues forecast to fall 60% next year, topping off a historical decline of 9.8% a year over the past three years. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to grow 19% next year. So while a broad number of companies are forecast to decline, unfortunately MEI Pharma is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Still, earnings per share are more important to value creation for shareholders. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.