Market forces rained on the parade of Avadel Pharmaceuticals plc (NASDAQ:AVDL) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the latest downgrade, the five analysts covering Avadel Pharmaceuticals provided consensus estimates of US$39m revenue in 2020, which would reflect a painful 29% decline on its sales over the past 12 months. The loss per share is expected to ameliorate slightly, reducing to US$0.53. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$44m and losses of US$0.48 per share in 2020. 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 expecting losses per share to increase.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Avadel Pharmaceuticals' past performance and to peers in the same industry. One more thing stood out to us about these estimates, and it's the idea that Avadel Pharmaceuticals'decline is expected to accelerate, with revenues forecast to fall 29% next year, topping off a historical decline of 9.7% a year over the past five years. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to grow 6.2% next year. So while a broad number of companies are forecast to grow, unfortunately Avadel Pharmaceuticals is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Avadel Pharmaceuticals. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on Avadel Pharmaceuticals, and their negativity could be grounds for caution.
There might be good reason for analyst bearishness towards Avadel Pharmaceuticals, like major dilution from new stock issuance in the past year. Learn more, and discover the 1 other flag we've identified, for free on our platform here.
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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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