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Results: Penumbra, Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

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As you might know, Penumbra, Inc. (NYSE:PEN) just kicked off its latest first-quarter results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 7.3% to hit US$169m. Penumbra also reported a statutory profit of US$0.32, which was an impressive 1,180% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Penumbra

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the most recent consensus for Penumbra from six analysts is for revenues of US$703.0m in 2021 which, if met, would be a solid 19% increase on its sales over the past 12 months. Earnings are expected to improve, with Penumbra forecast to report a statutory profit of US$0.92 per share. In the lead-up to this report, the analysts had been modelling revenues of US$681.5m and earnings per share (EPS) of US$0.52 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a very substantial lift in earnings per share in particular.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$318, suggesting that the forecast performance does not have a long term impact on the company'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. Currently, the most bullish analyst values Penumbra at US$335 per share, while the most bearish prices it at US$295. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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 Penumbra's growth to accelerate, with the forecast 26% annualised growth to the end of 2021 ranking favourably alongside historical growth of 20% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 8.1% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Penumbra to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Penumbra's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at US$318, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Penumbra. Long-term earnings power is much more important than next year's profits. We have forecasts for Penumbra going out to 2025, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with Penumbra .

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.