One thing we could say about the analysts on Evolus, Inc. (NASDAQ:EOLS) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Investors however, have been notably more optimistic about Evolus recently, with the stock price up a noteworthy 13% to US$4.47 in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.
After the downgrade, the seven analysts covering Evolus are now predicting revenues of US$88m in 2021. If met, this would reflect a huge 59% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 57% to US$0.88. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$115m and losses of US$0.88 per share in 2021. 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 making no real change to the loss per share numbers.
There was no real change to the consensus price target of US$7.13, suggesting that the revisions to revenue estimates are not expected to have a long-term impact on Evolus' valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Evolus at US$11.00 per share, while the most bearish prices it at US$4.00. 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. It's pretty clear that there is an expectation that Evolus' revenue growth will slow down substantially, with revenues next year expected to grow 59%, compared to a historical growth rate of 253% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.3% next year. So it's pretty clear that, while Evolus' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Evolus going forwards.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Evolus analysts - going out to 2024, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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. 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.
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