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Shareholders in Quidel Corporation (NASDAQ:QDEL) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. Investor sentiment seems to be improving too, with the share price up 8.1% to US$268 over the past 7 days. Could this big upgrade push the stock even higher?
Following the upgrade, the latest consensus from Quidel's five analysts is for revenues of US$2.3b in 2021, which would reflect a huge 128% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 215% to US$27.82. Before this latest update, the analysts had been forecasting revenues of US$2.1b and earnings per share (EPS) of US$22.84 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
Despite these upgrades, the analysts have not made any major changes to their price target of US$307, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Quidel at US$371 per share, while the most bearish prices it at US$190. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. It's clear from the latest estimates that Quidel's rate of growth is expected to accelerate meaningfully, with the forecast 128% revenue growth noticeably faster than its historical growth of 32% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.5% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Quidel is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for next year. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Quidel could be a good candidate for more research.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Quidel analysts - going out to 2022, 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 upgrading 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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