The analysts covering Chinook Therapeutics, Inc. (NASDAQ:KDNY) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the latest downgrade, the seven analysts covering Chinook Therapeutics provided consensus estimates of US$3.1m revenue in 2022, which would reflect a painful 94% decline on its sales over the past 12 months. Losses are supposed to balloon 66% to US$2.45 per share. However, before this estimates update, the consensus had been expecting revenues of US$3.7m and US$2.27 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Chinook Therapeutics' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 100% by the end of 2022. This indicates a significant reduction from annual growth of 4,385% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 15% annually for the foreseeable future. It's pretty clear that Chinook Therapeutics' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Chinook Therapeutics after today.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Chinook Therapeutics analysts - going out to 2024, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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