Earnings Update: Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) Just Reported And Analysts Are Trimming Their Forecasts
Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) defied analyst predictions to release its annual results, which were ahead of market expectations. Results overall were credible, with revenues arriving 3.2% better than analyst forecasts at US$10m. Higher revenues also resulted in lower statutory losses, which were US$0.41 per share, some 3.2% smaller than the analysts expected. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for Spectrum Pharmaceuticals
Following the latest results, Spectrum Pharmaceuticals' five analysts are now forecasting revenues of US$50.6m in 2023. This would be a substantial 401% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 46% to US$0.21. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$55.9m and losses of US$0.21 per share in 2023.
The average price target fell 15% to US$2.65, 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. There are some variant perceptions on Spectrum Pharmaceuticals, with the most bullish analyst valuing it at US$4.00 and the most bearish at US$0.75 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Spectrum Pharmaceuticals is forecast to grow faster in the future than it has in the past, with revenues expected to display 4x annualised growth until the end of 2023. If achieved, this would be a much better result than the 81% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 13% annually. So it looks like Spectrum Pharmaceuticals is expected to grow faster than its competitors, at least for a while.
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 Spectrum Pharmaceuticals' 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 forecasts for Spectrum Pharmaceuticals going out to 2025, 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 Spectrum Pharmaceuticals (1 doesn't sit too well with us!) that we have uncovered.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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