As you might know, Collegium Pharmaceutical, Inc. (NASDAQ:COLL) just kicked off its latest third-quarter results with some very strong numbers. The company beat both earnings and revenue forecasts, with revenue of US$79m, some 2.3% above estimates, and statutory earnings per share (EPS) coming in at US$0.32, 36% ahead of expectations. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the nine analysts covering Collegium Pharmaceutical are now predicting revenues of US$343.5m in 2021. If met, this would reflect a notable 14% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to bounce 32,985% to US$1.93. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$342.1m and earnings per share (EPS) of US$1.80 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at US$28.25, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. Currently, the most bullish analyst values Collegium Pharmaceutical at US$38.00 per share, while the most bearish prices it at US$8.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Collegium Pharmaceutical's revenue growth will slow down substantially, with revenues next year expected to grow 14%, compared to a historical growth rate of 52% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.7% next year. So it's pretty clear that, while Collegium Pharmaceutical's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Collegium Pharmaceutical following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 Collegium Pharmaceutical going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example - Collegium Pharmaceutical has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.
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. 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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