Earnings Beat: Co-Diagnostics, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
It's been a good week for Co-Diagnostics, Inc. (NASDAQ:CODX) shareholders, because the company has just released its latest first-quarter results, and the shares gained 3.9% to US$8.46. Revenues were US$20m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.26 were also better than expected, beating analyst predictions by 18%. Following the result, the 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Co-Diagnostics
Following the recent earnings report, the consensus from three analysts covering Co-Diagnostics is for revenues of US$68.4m in 2021, implying a concerning 26% decline in sales compared to the last 12 months. Statutory earnings per share are expected to crater 61% to US$0.70 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$68.4m and earnings per share (EPS) of US$0.70 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
With no major changes to earnings forecasts, the consensus price target fell 15% to US$23.00, suggesting that the analysts might have previously been hoping for an earnings upgrade. 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. There are some variant perceptions on Co-Diagnostics, with the most bullish analyst valuing it at US$30.00 and the most bearish at US$16.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 34% by the end of 2021. This indicates a significant reduction from annual growth of 141% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.9% annually for the foreseeable future. It's pretty clear that Co-Diagnostics' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Co-Diagnostics' revenues are expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Co-Diagnostics. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Co-Diagnostics analysts - going out to 2025, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with Co-Diagnostics (at least 2 which are a bit unpleasant) , and understanding them should be part of your investment process.
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 (at) simplywallst.com.
