Last week, you might have seen that Apollo Endosurgery, Inc. (NASDAQ:APEN) released its annual result to the market. The early response was not positive, with shares down 5.0% to US$2.04 in the past week. The results look positive overall; while revenues of US$51m were in line with analyst predictions, statutory losses were 3.1% smaller than expected, with Apollo Endosurgery losing US$1.27 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the two analysts covering Apollo Endosurgery provided consensus estimates of US$40.6m revenue in 2020, which would reflect a stressful 20% decline on its sales over the past 12 months. Losses are expected to increase substantially, hitting US$1.45 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$54.5m and losses of US$1.26 per share in 2020. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.
The consensus price target fell 18% to US$6.75, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.
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. Over the past five years, revenues have declined around 4.9% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 20% decline in revenue next year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 7.6% per year. So while a broad number of companies are forecast to decline, unfortunately Apollo Endosurgery is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The most important thing to take away is that the analysts increased 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. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Apollo Endosurgery's future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have analyst estimates for Apollo Endosurgery going out as far as 2024, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 4 warning signs for Apollo Endosurgery (1 is potentially serious) you should be aware of.
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