It's shaping up to be a tough period for Vanda Pharmaceuticals Inc. (NASDAQ:VNDA), which a week ago released some disappointing second-quarter results that could have a notable impact on how the market views the stock. It definitely looks like a negative result overall with revenues falling 18% short of analyst estimates at US$51m. Statutory losses were US$1.04 per share, 77% bigger than what the analysts expected. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Vanda Pharmaceuticals after the latest results.

Taking into account the latest results, the most recent consensus for Vanda Pharmaceuticals from four analysts is for revenues of US$253.5m in 2026. If met, it would imply a solid 18% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 33% to US$3.06. Before this latest report, the consensus had been expecting revenues of US$262.1m and US$2.27 per share in losses. So it's pretty clear the analysts have mixed opinions on Vanda Pharmaceuticals after this update; revenues were downgraded and per-share losses expected to increase.

The consensus price target fell 12% to US$12.44, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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 Vanda Pharmaceuticals analyst has a price target of US$21.00 per share, while the most pessimistic values it at US$5.75. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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. For example, we noticed that Vanda Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 38% growth to the end of 2026 on an annualised basis. That is well above its historical decline of 6.6% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 23% annually. So it looks like Vanda Pharmaceuticals is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Vanda Pharmaceuticals. 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 fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Vanda Pharmaceuticals' future valuation.

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 Vanda Pharmaceuticals going out to 2028, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Vanda Pharmaceuticals , and understanding this should be part of your investment process.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.