Investors in Denali Therapeutics Inc. (NASDAQ:DNLI) had a good week, as its shares rose 9.6% to close at US$23.89 following the release of its quarterly results. Statutory losses were a bit smaller than expected, at just US$0.55 per share, even though revenues of US$3.6m missed analyst expectations by a shocking 21%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Denali Therapeutics

Following the recent earnings report, the consensus from nine analysts covering Denali Therapeutics is for revenues of US$17.7m in 2020, implying a substantial 32% decline in sales compared to the last 12 months. Losses are expected to increase slightly, to US$2.27 per share. Before this latest report, the consensus had been expecting revenues of US$24.6m and US$2.40 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue forecasts while also reducing the estimated losses the business will incur.

There was no major change to the US$28.92 average price target, suggesting that the adjustments to revenue and earnings are not expected to have a long-term impact on the business. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Denali Therapeutics analyst has a price target of US$36.00 per share, while the most pessimistic values it at US$18.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. We would also point out that the forecast 32% revenue decline is better than the historical trend, which saw revenues shrink -80% annually over the past year

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. Even so, earnings are more important to the intrinsic value of the business. The consensus price target held steady at US$28.92, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Denali Therapeutics going out to 2024, and you can see them free on our platform here..

It is also worth noting that we have found 4 warning signs for Denali Therapeutics (1 is potentially serious!) that you need to take into consideration.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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