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Shareholders will be ecstatic, with their stake up 30% over the past week following ObsEva SA's (NASDAQ:OBSV) latest first-quarter results. Revenues came in 113% better than analyst models expected, at US$4.0kwhile statutory losses per share were US$0.48, in line with forecasts. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on ObsEva after the latest results.
Following the recent earnings report, the consensus from eight analysts covering ObsEva is for revenues of US$7.4k in 2020, implying a stressful 51% decline in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 30% to US$1.65. Before this earnings announcement, the analysts had been modelling revenues of US$7.5k and losses of US$1.77 per share in 2020. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers were unchanged.
There's been no major changes to the consensus price target of US$16.13, suggesting that reduced loss estimates are not enough to have a long-term positive impact on the stock's valuation. 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. The most optimistic ObsEva analyst has a price target of US$36.00 per share, while the most pessimistic values it at US$4.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. 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. We would highlight that sales are expected to reverse, with the forecast 51% revenue decline a notable change from historical growth of 14% 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 19% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - ObsEva is expected to lag the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that ObsEva's revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$16.13, with the latest estimates not enough to have an impact on their price targets.
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 estimates - from multiple ObsEva analysts - going out to 2024, and you can see them free on our platform here.
Even so, be aware that ObsEva is showing 5 warning signs in our investment analysis , and 2 of those are a bit unpleasant...
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