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Clovis Oncology, Inc. (NASDAQ:CLVS) Analysts Are Cutting Their Estimates: Here's What You Need To Know

Simply Wall St
·3 min read

It's been a mediocre week for Clovis Oncology, Inc. (NASDAQ:CLVS) shareholders, with the stock dropping 14% to US$4.26 in the week since its latest quarterly results. Revenues of US$39m came in 9.1% below estimates, but statutory losses were well contained with a per-share loss of US$0.89 being some 11% smaller than what the analysts were predicting. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Clovis Oncology

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earnings-and-revenue-growth

After the latest results, the five analysts covering Clovis Oncology are now predicting revenues of US$212.7m in 2021. If met, this would reflect a major 33% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 47% to US$2.65. Before this latest report, the consensus had been expecting revenues of US$235.2m and US$2.67 per share in losses.

The average price target fell 17% to US$7.20, with the analysts clearly concerned about the weaker revenue outlook and expectation of ongoing losses. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Clovis Oncology analyst has a price target of US$15.00 per share, while the most pessimistic values it at US$3.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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. We would highlight that Clovis Oncology's revenue growth is expected to slow, with forecast 33% increase next year well below the historical 48%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 20% next year. So it's pretty clear that, while Clovis Oncology's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Clovis Oncology's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Clovis Oncology analysts - going out to 2024, and you can see them free on our platform here.

Before you take the next step you should know about the 3 warning signs for Clovis Oncology (1 makes us a bit uncomfortable!) that we have uncovered.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.