One Eton Pharmaceuticals, Inc. (NASDAQ:ETON) Analyst Just Made A Major Cut To Next Year's Estimates
Market forces rained on the parade of Eton Pharmaceuticals, Inc. (NASDAQ:ETON) shareholders today, when the covering analyst downgraded their forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon. Investors however, have been notably more optimistic about Eton Pharmaceuticals recently, with the stock price up a worthy 12% to US$3.97 in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.
Following the downgrade, the most recent consensus for Eton Pharmaceuticals from its lone analyst is for revenues of US$41m in 2024 which, if met, would be a substantial 26% increase on its sales over the past 12 months. Statutory earnings per share are anticipated to sink 20% to US$0.07 in the same period. Prior to this update, the analyst had been forecasting revenues of US$50m and earnings per share (EPS) of US$0.26 in 2024. Indeed, we can see that the analyst is a lot more bearish about Eton Pharmaceuticals' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
See our latest analysis for Eton Pharmaceuticals
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Eton Pharmaceuticals' revenue growth is expected to slow, with the forecast 20% annualised growth rate until the end of 2024 being well below the historical 62% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 8.6% per year. So it's pretty clear that, while Eton Pharmaceuticals' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Eton Pharmaceuticals. Unfortunately, the analyst also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Given the serious cut to next year's outlook, it's clear that the analyst has turned more bearish on Eton Pharmaceuticals, and we wouldn't blame shareholders for feeling a little more cautious themselves.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Eton Pharmaceuticals going out as far as 2024, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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.
