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Investors in Nuvo Pharmaceuticals Inc. (TSE:MRV) had a good week, as its shares rose 2.9% to close at CA$1.75 following the release of its annual results. Revenues of CA$74m beat expectations by a respectable 3.9%, although statutory losses per share increased. Nuvo Pharmaceuticals lost CA$0.36, which was 80% more than what the analyst had included in their models. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimate to see what could be in store for next year.
Taking into account the latest results, the one analyst covering Nuvo Pharmaceuticals provided consensus estimates of CA$66.9m revenue in 2021, which would reflect a definite 9.3% decline on its sales over the past 12 months. Nuvo Pharmaceuticals is also expected to turn profitable, with statutory earnings of CA$0.10 per share. In the lead-up to this report, the analyst had been modelling revenues of CA$66.9m and earnings per share (EPS) of CA$0.10 in 2021. So it's pretty clear that, although the analyst has updated their estimates, there's been no major change in expectations for the business following the latest results.
The consensus price target rose 13% to CA$2.60despite there being no meaningful change to earnings estimates. It could be that the analystare reflecting the predictability of Nuvo Pharmaceuticals' earnings by assigning a price premium.
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 9.3% by the end of 2021. This indicates a significant reduction from annual growth of 31% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 35% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Nuvo Pharmaceuticals is expected to lag 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 analyst holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was also a nice increase in the price target, with the analyst clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
Plus, you should also learn about the 4 warning signs we've spotted with Nuvo Pharmaceuticals (including 2 which are potentially serious) .
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.
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