Investors in Kura Oncology, Inc. (NASDAQ:KURA) had a good week, as its shares rose 9.3% to close at US$7.43 following the release of its quarterly results. Revenues of US$23m came in 4.4% below estimates, but statutory losses were slightly better than expected, at US$0.78 per share. 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 consensus forecast from Kura Oncology's 14 analysts is for revenues of US$199.0m in 2027. This reflects a sizeable 151% improvement in revenue compared to the last 12 months. Losses are supposed to decline, shrinking 20% from last year to US$2.56. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$209.1m and losses of US$2.47 per share in 2027. Overall it looks as though the analysts are negative in this update. Although revenue forecasts held steady, the consensus also made a modest increase to to its losses per share forecasts.
Check out our latest analysis for Kura Oncology
The average price target was broadly unchanged at US$31.85, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. 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 Kura Oncology analyst has a price target of US$76.00 per share, while the most pessimistic values it at US$15.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. 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.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Kura Oncology's rate of growth is expected to accelerate meaningfully, with the forecast 109% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 72% 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 22% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Kura Oncology to grow faster than the wider 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 Kura Oncology. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target held steady at US$31.85, with the latest estimates not enough to have an impact on their price targets.
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 Kura Oncology going out to 2028, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 1 warning sign for Kura Oncology that you need to be mindful of.
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