Investors in Cerus Corporation (NASDAQ:CERS) had a good week, as its shares rose 5.3% to close at US$5.16 following the release of its yearly results. Sales hit US$75m in line with forecasts, although the company reported a statutory loss per share of US$0.51 that was somewhat smaller than analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from Cerus's four analysts is for revenues of US$89.9m in 2020, which would reflect a sizeable 20% increase on its sales over the past 12 months. Statutory losses are expected to increase substantially, hitting US$0.42. per share. Before this earnings announcement, analysts had been forecasting revenues of US$90.3m and losses of US$0.37 per share in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the real cut to new EPS forecasts.
The consensus price target fell 7.0% to US$8.25 per share, with analysts clearly concerned by ballooning losses. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Cerus analyst has a price target of US$9.50 per share, while the most pessimistic values it at US$7.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
In addition, we can look to Cerus's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. We can infer from the latest estimates that analysts are expecting a continuation of Cerus's historical trends, as next year's forecast 20% revenue growth is roughly in line with 18% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 7.9% per year. So it's pretty clear that Cerus is forecast to grow substantially faster than its market.
The Bottom Line
The most obvious conclusion is that analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Cerus's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Cerus going out to 2022, and you can see them free on our platform here.
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