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Earnings Update: Here's Why Analysts Just Lifted Their ShockWave Medical, Inc. Price Target To US$52.60

Simply Wall St
·4 mins read

ShockWave Medical, Inc. (NASDAQ:SWAV) just released its yearly report and things are looking bullish. Revenues and losses per share both beat expectations, with revenues of US$43m leading estimates by 2.0%. Statutory losses were somewhat smaller than analysts expected, coming in at US$2.14 per share. Following the result, 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on ShockWave Medical after the latest results.

See our latest analysis for ShockWave Medical

NasdaqGS:SWAV Past and Future Earnings, February 17th 2020
NasdaqGS:SWAV Past and Future Earnings, February 17th 2020

After the latest results, the six analysts covering ShockWave Medical are now predicting revenues of US$76.1m in 2020. If met, this would reflect a major 77% improvement in sales compared to the last 12 months. Statutory losses are expected to increase substantially, hitting US$1.75. per share. Before this earnings announcement, analysts had been forecasting revenues of US$75.4m and losses of US$1.71 per share in 2020. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the earnings per share expectations following these results.

Although analysts are now forecasting higher losses, the average analyst price target rose 7.8% to 48.8, which could indicate that these losses are expected to be "one-off", or analysts think they won't have a longer-term impact on the business. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic ShockWave Medical analyst has a price target of US$58.00 per share, while the most pessimistic values it at US$47.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.

It can also be useful to step back and take a broader view of how analyst forecasts compare to ShockWave Medical's performance in recent years. It's pretty clear that analysts expect ShockWave Medical's revenue growth will slow down substantially, with revenues next year expected to grow 77%, compared to a historical growth rate of 250% over the past year. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.9% next year. So it's pretty clear that, while ShockWave Medical's revenue growth is expected to slow, it's still expected to grow faster than the market itself.

The Bottom Line

The most important thing to take away is that analysts reconfirmed their loss per share estimates for next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that ShockWave Medical's revenues are expected to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for ShockWave Medical going out to 2023, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.