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CASI Pharmaceuticals, Inc. (NASDAQ:CASI) just released its latest first-quarter results and things are looking bullish. Results clearly exceeded expectations, with a substantial revenue beat leading to smaller losses in what looks like a definite win for investors. Revenues were US$3.4m and the statutory loss per share was US$0.09, smaller than the analysts had forecast. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for CASI Pharmaceuticals from three analysts is for revenues of US$11.2m in 2020 which, if met, would be a substantial 49% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 23% to US$0.37. Before this earnings announcement, the analysts had been modelling revenues of US$7.88m and losses of US$0.41 per share in 2020. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.
The consensus price target fell 45%, to US$3.20, suggesting that the analysts remain pessimistic on the company, despite the improved earnings and revenue outlook. 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. Currently, the most bullish analyst values CASI Pharmaceuticals at US$3.50 per share, while the most bearish prices it at US$2.89. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that CASI Pharmaceuticals' revenue growth will slow down substantially, with revenues next year expected to grow 49%, compared to a historical growth rate of 79% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 24% next year. So it's pretty clear that, while CASI Pharmaceuticals' 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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple CASI Pharmaceuticals analysts - going out to 2024, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 3 warning signs for CASI Pharmaceuticals that you should be aware of.
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