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It's been a mediocre week for Silk Road Medical, Inc (NASDAQ:SILK) shareholders, with the stock dropping 11% to US$61.94 in the week since its latest quarterly results. Revenues were a bright spot, with US$20m in sales arriving 5.7% ahead of expectations, although statutory earnings didn't fare nearly so well, recording a loss of US$0.31, some 5.7% below consensus predictions. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Silk Road Medical after the latest results.
Taking into account the latest results, the most recent consensus for Silk Road Medical from six analysts is for revenues of US$107.9m in 2021 which, if met, would be a substantial 48% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 44% to US$0.68. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$110.8m and losses of US$0.61 per share in 2021. While next year's revenue estimates dropped there was also a loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The analysts lifted their price target 7.2% to US$70.57, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value. 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 Silk Road Medical analyst has a price target of US$80.00 per share, while the most pessimistic values it at US$54.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. Next year brings more of the same, according to the analysts, with revenue forecast to grow 48%, in line with its 44% annual growth over the past three years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 9.9% next year. So it's pretty clear that Silk Road Medical is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Silk Road Medical. They also downgraded their revenue estimates, although industry data suggests that Silk Road Medical's revenues are expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Silk Road Medical going out to 2024, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Silk Road Medical that you need to take into consideration.
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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