Analysts Have Made A Financial Statement On Cara Therapeutics, Inc.'s (NASDAQ:CARA) Yearly Report
As you might know, Cara Therapeutics, Inc. (NASDAQ:CARA) last week released its latest full-year, and things did not turn out so great for shareholders. Earnings missed the mark badly, with revenues of US$21m falling 24% short of expectations. Losses correspondingly increased, with a US$2.19 per-share statutory loss some 12% larger than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for Cara Therapeutics
After the latest results, the consensus from Cara Therapeutics' six analysts is for revenues of US$5.59m in 2024, which would reflect a disturbing 73% decline in revenue compared to the last year of performance. Losses are predicted to fall substantially, shrinking 46% to US$1.17. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$12.3m and losses of US$1.40 per share in 2024. We can see there's definitely been a change in sentiment in this update, with the analysts administering a meaningful downgrade to next year's revenue estimates, while at the same time reducing their loss estimates.
There was no major change to the US$5.42average price target, suggesting that the adjustments to revenue and earnings are not expected to have a long-term impact on the business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Cara Therapeutics at US$10.00 per share, while the most bearish prices it at US$1.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Cara Therapeutics' past performance and to peers in the same industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 73% by the end of 2024. This indicates a significant reduction from annual growth of 4.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.1% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Cara Therapeutics is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Still, earnings per share are more important to value creation for shareholders. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Cara Therapeutics. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Cara Therapeutics analysts - going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example - Cara Therapeutics has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
