TherapeuticsMD, Inc. (NASDAQ:TXMD) Analysts Just Cut Their EPS Forecasts Substantially
The latest analyst coverage could presage a bad day for TherapeuticsMD, Inc. (NASDAQ:TXMD), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. Surprisingly the share price has been buoyant, rising 10% to US$1.59 in the past 7 days. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.
After this downgrade, TherapeuticsMD's seven analysts are now forecasting revenues of US$128m in 2021. This would be a major 119% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 52% to US$0.34. Yet before this consensus update, the analysts had been forecasting revenues of US$147m and losses of US$0.28 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
Check out our latest analysis for TherapeuticsMD
There was no major change to the consensus price target of US$6.20, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic TherapeuticsMD analyst has a price target of US$9.00 per share, while the most pessimistic values it at US$4.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the TherapeuticsMD's past performance and to peers in the same industry. The analysts are definitely expecting TherapeuticsMD's growth to accelerate, with the forecast 119% growth ranking favourably alongside historical growth of 27% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.6% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that TherapeuticsMD is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for next year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on TherapeuticsMD after the downgrade.
That said, the analysts might have good reason to be negative on TherapeuticsMD, given a short cash runway. Learn more, and discover the 2 other warning signs we've identified, for 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.
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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