Cowen Inc. (NASDAQ:COWN) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.
Following the upgrade, the latest consensus from Cowen's four analysts is for revenues of US$1.8b in 2021, which would reflect a major 26% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$1.6b of revenue in 2021. It looks like there's been a clear increase in optimism around Cowen, given the solid increase in revenue forecasts.
We'd point out that there was no major changes to their price target of US$55.80, suggesting the latest estimates were not enough to shift their view on the value of the business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Cowen analyst has a price target of US$68.00 per share, while the most pessimistic values it at US$43.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Cowen's growth to accelerate, with the forecast 36% annualised growth to the end of 2021 ranking favourably alongside historical growth of 26% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.1% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Cowen is expected to grow much faster than its industry.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for Cowen this year. The analysts also expect revenues to grow faster than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Cowen.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 5 potential risks with Cowen, including recent substantial insider selling. For more information, you can click through to our platform to learn more about this and the 3 other risks we've identified .
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