There's been a notable change in appetite for Cara Therapeutics, Inc. (NASDAQ:CARA) shares in the week since its annual report, with the stock down 13% to US$15.00. The results overall were pretty much dead in line with analyst forecasts; revenues were US$20m and statutory losses were US$2.49 per share. Following the result, 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. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
After the latest results, the consensus from Cara Therapeutics's eight analysts is for revenues of US$19.5m in 2020, which would reflect a measurable 2.1% decline in sales compared to the last year of performance. Per-share losses are expected to creep up to US$2.40, on a statutory basis. Yet prior to the latest earnings, analysts had been forecasting revenues of US$26.6m and losses of US$2.37 per share in 2020. So there's been quite a change-up of views after the latest results, with analysts making a serious cut to their revenue forecasts while also granting a to the earnings per share numbers.
There was no real change to the average analyst price target of US$31.89, suggesting that the revisions to revenue estimates are not expected to have a long-term impact on Cara Therapeutics's valuation.' The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Cara Therapeutics, with the most bullish analyst valuing it at US$39.00 and the most bearish at US$20.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast revenue decline of 2.1% a significant reduction from annual growth of 53% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 5.1% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Cara Therapeutics to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at US$31.89, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Cara Therapeutics analysts - going out to 2024, and you can see them free on our platform here.
We also provide an overview of the Cara Therapeutics Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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